The existence of the informal sector in many less developed countries is evidence of the irrational behavior of less educated people in poor countries. Is this true or false? Explain your answer.

Question

Quizplus · Accepted Answer

The existence of the informal sector is actually a rational response to an overregulated economy. The informal sector can include some of the most talented and productive resources in the economy. This justifies trying to incorporate the sector into the formal economy by establishing property rights and giving the sector access to the same public services as the formal sector.

The Existence of the Informal Sector in Many Less Developed