What Is the Difference Between Formal and Informal Sectors?

The formal sector consists of the businesses, enterprises and economic activities that are monitored, protected and taxed by the government, whereas the informal sector is comprised of the workers and enterprises that are not under government regulation. British anthropologist Keith Hart coined the term "informal sector" in 1973 as part of a study on Ghana. There are many conflicting theories as to the role and benefits of the informal sector.