McLain, R., Alexander, S., and Jones, E.T. Incorporating understandings of informal economic activity in natural resource and economic development policy. General Technical Report Series. Portland, OR: USDA-Forest Service, Pacific Northwest Research Station.

This project synthesizes the literature on the role of informal economic activity in the United State’s post-industrial economy. Informal economic activity is expanding in the United States, and is likely to continue doing so in the foreseeable future. Studies show that the formal and informal economic sectors are inextricably intertwined, with individuals and households combining elements of both sectors to construct their livelihoods. Although the informal economy is often thought of as something individuals engage in as a last resort, in practice virtually everyone participates in the informal economy. Paradoxically, efforts to expand the formalized sector often exacerbate negative types of informal economic activity. Sociologists suggest that one alternative is to focus on incremental upgrading rather than full-fledged formalization, particularly for microenterprises. We use the nontimber forest products sector as a case example for illustrating the implications of this research for natural resource and rural economic development policy.