Over the last decade, significant global and regional forces including changes in technology, trade patterns, and business practices, with a steady shift in value added production and employment toward knowledge-intensive activities and services such as finance, the hospitality industry, and the retail trade, have been affecting the production and occupational structures of most developed economies. Many countries of Eastern Europe and Central Asia have also experienced ongoing exposure to international product and labour markets, some via integration with the European Union (EU), and in general experiencing more international competition and labour migration. The acceleration of growth, the easy access to credit during the financial boom, and improvements in business and labour regulations in some countries boosted labour demand. On the supply side, key factors in some countries included shifts in labour force participation rates, cross-border migration, and changes in social benefits that may have affected work incentives. With the sudden shock of the 2008 international financial crisis and its prolonged after-effects, all countries in the region are being forced to reassess their position in the international checkerboard, also in light of looming demographic trends and competing social demands. All countries will have to consider reforms to improve the quality of the business climate, make labour markets more competitive, modernise the public sector, deepen financial development, and increase integration in global markets are a necessary condition for positive and sustained employment creation. These efforts will have to be comprehensive and sustained for the payoff to materialise, as illustrated by the experience of the advanced reformers in the region. Moving along the modernisation path will require further economic restructuring and labour reallocation, which can become a wasteful and inefficient process with significant short-term welfare losses among specific groups of workers, unless it is accompanied by policies aimed at improving the match between jobs and workers and enhancing the employability of those people who are most affected by the changes. Policies that are sensitive to age and gender can help increase the efficiency and effectiveness of the restructuring process.

Informality: Exit and Exclusion analyzes informality in Latin America, exploring root causes and reasons for and implications of its growth. The authors use two distinct but complementary lenses: informality driven by ""exclusion"" from state benefits or the circuits of the modern economy, and driven by voluntary ""exit"" decisions resulting from private cost-benefit calculations that lead workers and firms to opt out of formal institutions. They find both lenses have considerable explanatory power to understand the causes and consequences of informality in the region.""Informality: Exit and Exclusion"" concludes that reducing informality levels and overcoming the ""culture of informality"" will require actions to increase aggregate productivity in the economy, reform poorly designed regulations and social policies, and increase the legitimacy of the state by improving the quality and fairness of state institutions and policies. Although the study focuses on Latin America, its analysis, approach, and conclusions are relevant for all developing countries."" Informality: Exit and Exclusion"" will be of value to professionals and academics studying labor market, social protection, tax, microenterprise development, and urban public policies, and to those working in government, international organizations, research institutions, and universities.