ABSTRACT
This chapter investigates the relationships between the informal sector and the state and analyses the intensity of corruption and its consequences in the informal economy. It is worth noting it is the first time ever the issue of corruption, measured by experience rather than the perception, in the informal sector it is extensively analysed. The chapter examines how informal enterprises are using public services and what they spend on it. This aspect is particularly important in that the frequency of interactions with the administration varies from one activity to the next and that certain entrepreneurs might steer clear of public officials precisely because they are afraid of being confronted with corruption. The chapter discusses Fisman, Svensson, Vial and Hanoteau by instrumenting bribe payments by industry-location specific variables. The survey's results suggest that there is no will of the state to force informal production units (IPU) to comply with the law.
