Informality: The State of the Art. N. 2

Digitalization and Hybrid Informality: A State-of-the-Art Review of Transformation, Measurement and Governance in the Digital Economy

Santos M. Ruesga, Universidad Autónoma de Madrid

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{class:etiquetas}Informal economy / Digitalization / Platform work / Hybrid informality / Formalization / Digital governance / Platform economy / Labour markets

ABSTRACT

The rapid diffusion of digital technologies is reshaping economic activities worldwide and generating profound implications for the informal economy. While earlier debates on informality focused on structural transformation, labour-market segmentation, and institutional weaknesses, recent technological developments have introduced new forms of work, entrepreneurship, and governance that challenge traditional distinctions between formal and informal economic activities. This article reviews the emerging literature on the relationship between digitalization and informality, with particular attention to digital labour platforms, fintech, artificial intelligence, e-government systems, and digital identification technologies. Drawing on scholarship from development economics, labour economics, economic sociology, and public policy, the review synthesizes evidence on three interconnected dimensions: the transformation of informal economic activities, the measurement of informality in the digital age, and the governance mechanisms developed to regulate digitally mediated economic activities. The article argues that digitalization is not simply reducing or reproducing informality. Rather, it is generating a new regime of hybrid informality characterized by increased digital visibility, partial integration into formal institutions, and persistent exclusion from labour protections and social protection systems. This concept is proposed as a potentially useful analytical framework for examining contemporary forms of platform work, online entrepreneurship, and digitally mediated self-employment; its comparative advantages over alternative frameworks remain to be established empirically. The review concludes by identifying major research gaps and proposing an integrated research agenda for the study of informality in the digital economy.

1. Introduction

The informal economy remains one of the defining characteristics of contemporary labour markets. Despite decades of economic growth, industrialization, and institutional development, informal employment continues to account for a substantial share of global employment. According to the International Labour Organization (ILO, 2018), approximately 61.2 per cent of the world's employed population is engaged in informal employment, with particularly high concentrations in low- and middle-income countries. Informality remains central to income generation, employment creation, and economic survival for hundreds of millions of workers and enterprises.

For much of the twentieth century, debates concerning informality were largely framed around questions of economic development and structural transformation. Early modernization theories viewed informality as a transitional phenomenon that would gradually disappear as economies industrialized and formal employment expanded (Lewis, 1954). However, subsequent research demonstrated that informality persisted even in contexts characterized by sustained economic growth, urbanization, and increasing integration into global markets (Portes & Haller, 2005; Portes et al., 1989; Chen, 2012; Williams, 2014). Rather than representing a residual sector destined to disappear, informality emerged as a structural feature of contemporary capitalism.

Over the past decade, digital platforms, mobile payments, digital government and data-intensive technologies have altered how work is organized, transactions are recorded, and institutions regulate economic activity (World Bank, 2019; UNCTAD, 2021). These developments can facilitate registration and access to services while also producing highly visible forms of work that remain weakly protected (Berg et al., 2018; Wood et al., 2019; ILO, 2021). This mismatch between visibility, institutional integration and protection motivates the concept of hybrid informality: digitally visible activity that is partially integrated into formal institutions but retains significant regulatory or social-protection deficits. The concept is proposed as an analytical framework, not as a demonstrated improvement over existing multidimensional approaches.

The review asks: How is digitalization reshaping informal economic activities through hybrid forms of work, entrepreneurship, measurement and governance? It addresses this question by integrating evidence on transformation, measurement and regulation and by assessing where the evidence supports the hybrid-informality framework and where claims remain provisional.

2. Method

This study uses a narrative state-of-the-art review suited to an emerging, multidisciplinary field (Baumeister & Leary, 1997; Snyder, 2019). The audited retained bibliography contains 46 publications (1954–2025), with emphasis on post-2020 research and earlier foundational work. All 46 retained publications constituted the analytical corpus used for the structured synthesis; no separate set of retained publications was used solely for contextual, theoretical, or methodological support. Targeted iterative searches combined terms related to informality with digitalization, platform work, fintech, digital identity, e-government, electronic invoicing, algorithmic management, AI, blockchain, formalization, and measurement. Sources were retained when they contributed empirical evidence, comparative analysis, statistical guidance, or a directly relevant theoretical mechanism. Because a complete contemporaneous search log was not preserved, the review does not claim systematic-review reproducibility or reconstruct PRISMA-style retrieval counts.

The analytical corpus was synthesized across three dimensions—transformation, measurement, and governance—and coded by technology, context, design, evidence type, findings, and implications for hybrid informality. Evidentiary strength was classified qualitatively as strong, moderate, or limited according to breadth, directness, and replication of support for each synthesis claim; this is not a formal risk-of-bias score.

The main limitations are the absence of a complete contemporaneous search log, the heterogeneity of definitions and methods, the concentration of empirical studies in platform work, and the limited availability of longitudinal and causal designs. These constraints are considered explicitly when grading evidentiary strength.

Because the review was developed as an iterative narrative state-of-the-art review, a complete contemporaneous search log was not preserved. Exact database-specific retrieval totals, duplicate counts, and exclusion counts therefore cannot be reconstructed reliably. The review consequently reports only procedures and corpus characteristics that can be verified from the retained record and does not claim PRISMA-style reproducibility.

To strengthen analytical transparency, publications in the analytical corpus were compared through a structured synthesis matrix covering transformation, measurement and governance; technology and context; research design; evidence type; principal findings; implications for hybrid informality; and evidentiary strength. Table 1 condenses this matrix, while Table 1A evaluates the strength of support for the principal synthesis claims. Tables and figures distinguish source-reported findings from author-developed analytical constructions. Whenever ordinal descriptors (e.g., high, moderate, low, advanced, limited) are used, the accompanying source note states the operational meaning of the category and whether it represents evidentiary strength, institutional development, or an illustrative analytical classification.

Table 1. Main Contributions of the Literature on Digitalization and Informality

Author(s)	Year	Main Topic	Methodology	Main Findings	Type of Evidence	Strength of Evidence
Berg et al.	2018	Platform work	Global review	Platforms create opportunities but weaken labour protections	Comparative empirical/global survey evidence	Strong
Wood et al.	2019	Gig economy	Qualitative interviews	Algorithmic control generates new vulnerabilities	Primary qualitative evidence (interviews)	Strong
Medina & Schneider	2019	Shadow economy measurement	Econometric estimation	Informality remains substantial globally	Cross-country macroeconomic estimates	Moderate
Heeks	2021	Digital labour markets	Conceptual review	Digitalization transforms labour-market structures	Conceptual/secondary synthesis	Limited/conceptual
ILO	2021	Platform economy	Global report	Platform work challenges existing labour institutions	Global institutional report; comparative evidence	Strong
OECD-ILO-EU	2023	Measurement	Statistical handbook	New methods required for digital work	Statistical and methodological guidance	Strong
Cook & Rani	2023	Platform work in developing countries	Comparative analysis	Digitalization creates hybrid labour arrangements	Comparative secondary empirical evidence	Moderate
Williams	2023	E-government and formalization	Policy analysis	Digital governance can facilitate formalization	Policy and institutional analysis	Moderate
Maiti & Khari	2025	Digital governance	Cross-country panel analysis	Governance quality conditions formalization outcomes	Comparative cross-country empirical evidence	Moderate

Source: Author’s structured synthesis of Berg et al. (2018), Medina and Schneider (2019), Heeks (2021), ILO (2021), OECD, ILO, and European Union (2023), Cook and Rani (2023), Williams (2023), and Maiti and Khari (2025). “Strength of evidence” is an author-assigned synthesis category, not a rating reported by the cited studies. Strong = direct support from multiple empirical or comparative sources and/or authoritative measurement evidence with convergence across settings; Moderate = relevant empirical or institutional support but with limited comparability, coverage, causal identification, or replication; Limited/conceptual = mainly conceptual, prospective, case-specific, or otherwise insufficiently replicated evidence.

Table 2. Strength of Evidence for the Principal Synthesis Claims

Principal theme/conclusion	Strength	Brief justification
Digital platforms reorganize labour while often leaving gaps in employment and social protection.	Strong	Supported by global/comparative reports and multiple empirical studies of platform work, including survey and qualitative evidence. Convergence across methods and settings strengthens the claim.
Digitalization increases economic visibility but does not automatically produce full formalization.	Moderate	The pattern is consistent across platform work, digital payments, and governance studies, but direct comparative tests linking digital visibility to formalization outcomes remain uneven.
Digital entrepreneurship frequently combines formal digital infrastructures with incomplete business or labour formalization.	Moderate	Evidence is drawn from institutional reports and studies across several developing regions, but coverage is concentrated in selected sectors and countries and is less standardized than the platform-work literature.
Existing statistical systems face growing difficulties capturing platform work, multiple jobholding and digitally mediated cross-border activity.	Strong	International statistical guidance and measurement work converge on classification and data-access problems; the evidence base is methodologically explicit and directly focused on measurement.
Digital government, digital identity and electronic tax systems can facilitate institutional integration and compliance.	Moderate	There is empirical and administrative evidence for particular instruments and countries, but effects depend strongly on institutional capacity and cannot be generalized as automatic formalization.
The component features of hybrid informality—digital visibility, partial institutional integration and protection deficits—coexist in multiple digitally mediated activities.	Moderate	The component features recur across several empirical and institutional literatures, but the integrated “hybrid informality” construct is proposed by this review and has not been systematically validated against alternative frameworks.
AI and blockchain will substantially improve the measurement or formalization of informal activity.	Limited	The literature is still emerging and much of the support is prospective, conceptual, or based on experimental applications rather than mature comparative evidence.

Three broad limitations qualify the synthesis that follows.

First, because the literature on digitalization and informality is relatively recent and rapidly evolving, many conclusions remain provisional.

Second, much of the available evidence comes from case studies and policy reports rather than large-scale comparative analyses.

Third, empirical research is concentrated in ride-hailing, food delivery, and online freelancing, leaving other forms of digital entrepreneurship comparatively underexplored.

Taken together, these limitations call for caution in generalization while still allowing the review to identify areas of convergence and priorities for future research.

3. From Informality to Hybrid Informality

Digitalization has transformed economic institutions by reducing transaction costs, expanding information flows, and enabling new forms of coordination (Castells, 2010; Goldfarb & Tucker, 2019).

Digital platforms are particularly important in this regard. They function as intermediaries connecting workers, consumers, and firms through algorithmic systems. Unlike traditional firms, platforms frequently coordinate economic activity without establishing conventional employment relationships (Srnicek, 2017; Graham et al., 2017; Rani & Furrer, 2021).

These organizational changes have important implications for how informality is conceptualized.

Traditional approaches often associate regulatory exclusion with limited institutional visibility; digital technologies complicate this relationship by making some activities highly observable without necessarily extending formal protections.

Many platform workers generate extensive digital records—including transaction histories, geolocation data, performance metrics, and payment information—yet this visibility does not necessarily translate into labour or social-protection coverage.

The resulting institutional arrangements may therefore combine features conventionally associated with both formality and informality.

To organize these emerging configurations analytically, this article proposes the concept of hybrid informality.

Hybrid informality refers to economic activities characterized by three interrelated features—digital visibility, partial institutional integration, and persistent regulatory deficits. This emphasis on multidimensional institutional status builds on prior work documenting the heterogeneity of informal employment and organization (Chen et al., 2015).

Digital visibility refers to the existence of electronic records generated through platforms, payment systems, or digital infrastructures.

Partial institutional integration refers to participation in selected formal institutions, such as taxation systems, banking services, or business registration frameworks.

Persistent regulatory deficits refer to continuing gaps in labour rights, social protection, legal recognition, or regulatory compliance.

Examples include:

• Ride-hailing drivers are registered for tax purposes but lack employment protections.
• Online freelancers participate in global labour markets without access to social insurance.
• Social media entrepreneurs conduct substantial commercial activities without formal business registration.
• Platform workers are subject to algorithmic management while being classified as independent contractors.

Hybrid informality therefore describes configurations that occupy intermediate positions between conventional categories of formality and informality.

Rather than treating formality and informality as binary categories, the framework situates economic activities along a continuum of institutional integration.

This perspective offers a potentially useful analytical lens for organizing evidence on complex forms of economic organization emerging in the digital economy and serves as the theoretical foundation for the remainder of this review. The present review does not, however, establish that it performs better than alternative multidimensional or continuum-based frameworks.

4. Digital Transformation of Informal Economic Activities

Digital labour platforms are among the most consequential organizational changes associated with contemporary digitalization.

Platforms such as Uber, Glovo, Deliveroo, Rappi, Fiverr, Upwork, Freelancer, and Amazon Mechanical Turk connect workers and consumers through algorithmic systems. These platforms coordinate labour without relying on traditional employment relationships (Srnicek, 2017; Pesole et al., 2018).

The rapid growth of platform work has generated extensive academic debate. Optimistic accounts emphasize increased flexibility, expanded labour-market participation, and reduced barriers to entry (Heeks, 2021). For many workers, platform employment provides opportunities unavailable through conventional labour markets.

Such opportunities may be especially relevant in developing economies characterized by high unemployment and labour-market segmentation.

At the same time, empirical research documents substantial challenges.

Platform workers frequently lack key dimensions of decent work and employment protection (Berg, 2016; Berg et al., 2018; ILO, 2021):

• social protection;
• collective bargaining rights;
• employment security;
• occupational safety guarantees.

Moreover, workers often experience extensive forms of algorithmic control. Platforms use algorithms to allocate tasks, evaluate performance, determine remuneration, and regulate access to future work opportunities (Wood et al., 2019, p. 56).

This combination creates a central tension in platform work.

Workers may appear formally autonomous because they are classified as independent contractors, while simultaneously experiencing forms of control comparable to those found in conventional employment relationships.

The resulting arrangements are neither fully formal nor fully informal. Rather, they exemplify the emergence of hybrid informality.

Digital platforms, social media and mobile finance lower barriers to market participation and financial access, allowing microentrepreneurs to reach wider markets and use formal payment infrastructures. Evidence from mobile money and digital commerce shows gains in inclusion and resilience, but many participants remain unregistered or outside labour and social-protection systems (Aker & Blumenstock, 2015; Suri & Jack, 2016, pp. 1288–1292; UNCTAD, 2021; Demirgüç-Kunt et al., 2022). Digital entrepreneurship and fintech therefore illustrate partial institutional integration rather than automatic formalization.

Table 3. Examples of Hybrid Informality

Economic Activity	Digital Visibility	Institutional Integration	Labour Protection
Ride-hailing driver	High	Moderate	Low
Food-delivery worker	High	Moderate	Low
Online freelancer	High	Moderate	Low
Social media seller	Moderate	Low	None
Digital content creator	High	Variable	Limited

Source: Analytical construction informed by Hart (1973), Chen (2012), Heeks (2021), ILO (2021), Wood et al. (2019), Cook and Rani (2023), and Williams (2023). The rows are illustrative ideal-types rather than classifications directly reported by any single source. Digital visibility: High = activity routinely generates platform/payment/account records; Moderate = some transactions or interactions are digitally recorded, but coverage is incomplete. Institutional integration: Moderate = participation in at least one formal system (e.g., taxation, payments, registration) without comprehensive integration; Low = only sporadic or narrow formal-system participation; Variable = heterogeneous across jurisdictions/business models. Labour protection: Low/Limited = some protections may exist, but substantial employment or social-protection gaps remain; None = the ideal-type assumes no employment-linked protection. Actual status varies by country, contract and platform.

These examples illustrate some of the limitations of treating formality and informality as exhaustive binary categories in digitally mediated activities.

Digitalization does not simply move workers from informality to formality. Instead, it creates intermediate institutional arrangements characterized by varying combinations of visibility, regulation, and protection.

The effects of digitalization are also unevenly distributed across social groups.

Access to digital technologies varies according to:

• gender;
• age;
• education;
• income;
• geographic location.

Women frequently face barriers related to digital literacy, internet access, and access to financial resources (Hunt & Samman, 2019).

Similarly, young workers are disproportionately represented in platform work and other forms of digitally mediated employment.

These patterns suggest that digitalization may simultaneously expand opportunities and reproduce existing inequalities.

Consequently, analyses of hybrid informality must account for social differences in access to digital resources and institutional protections.

5. Measurement Challenges and Governance

Informality is conventionally measured through labour-force and enterprise surveys or indirect macroeconomic techniques (ILO, 2018; Medina & Schneider, 2019). Digital work complicates each approach because workers may combine wage employment, self-employment, platform work and entrepreneurship; online enterprises may lack fixed establishments; and cross-border activities may escape national classifications. A further constraint is platform opacity: firms hold detailed transaction and work data that statistical agencies often cannot access. These problems strengthen the case for multidimensional measurement rather than abandoning established survey and administrative sources.

Administrative records, electronic invoicing, digital payments, and platform data can increase the observability of activities that conventional surveys capture imperfectly. International statistical guidance increasingly emphasizes access to platform-generated information (OECD, ILO, & European Union, 2023). Machine-learning methods may help process these data, but evidence that they yield more valid or representative measures of informality remains limited; their value should be tested empirically rather than assumed.

These features create a case for adapting measurement approaches to multidimensional forms of institutional integration.

Traditional statistical systems often rely on binary classifications that distinguish workers as formal or informal.

Many digitally mediated activities, however, occupy intermediate positions, as the examples in Table 2 illustrate.

Table 4. Measurement Dimensions of Hybrid Informality

Dimension	Formal	Hybrid	Informal
Digital visibility	High	High	Low
Tax registration	Yes	Partial	No
Social protection	Yes	Partial	No
Labour rights	Yes	Limited	No
Administrative records	Complete	Partial	Limited

Source: Analytical measurement framework informed by Hart (1973), Chen (2012), Heeks (2021), ILO (2021), Wood et al. (2019), Cook and Rani (2023), and Williams (2023). The table is a conceptual typology developed for this review, not a classification reproduced from the cited literature. High/complete = the dimension is expected to be systematically present or recorded; Partial = present for some components but not comprehensively; Limited/low = weak, incomplete, or irregular coverage; Yes/No denote the ideal-typical endpoints. These categories are heuristic and require empirical validation before use as a statistical scale.

This framework suggests that informality should increasingly be measured along multiple dimensions rather than through binary classifications.

Future statistical systems may need to develop composite indicators capable of capturing varying degrees of institutional integration.

The OECD, ILO and European Union (2023) have begun adapting statistical frameworks to platform work, but international comparability remains constrained by differences in data access and statistical capacity. A practical agenda is to integrate surveys, administrative records, platform information and transaction data while testing whether multidimensional indicators of institutional integration improve on binary formal–informal classifications.

Digital government can reduce administrative costs and connect citizens and firms to registration, taxation, banking and social programmes through interoperable databases, online services and digital identity (Williams, 2023; OECD, 2023; United Nations, 2022; World Bank, 2021). Evidence from systems such as Estonia's digital administration and India's Aadhaar illustrates gains in administrative access and state capacity, but institutional visibility does not itself guarantee labour-market formalization. Effects depend on governance quality, implementation capacity, and safeguards for inclusion (Muralidharan et al., 2021; Maiti & Khari, 2025).

Tax compliance is another important dimension of digital governance. Many governments have adopted digital taxation systems to improve transparency, reduce evasion, and strengthen fiscal capacity. These systems typically include: electronic invoicing; real-time transaction reporting; digital tax filing; integrated administrative databases.

Latin America has been an important region for the development and diffusion of digital tax-administration instruments.

Brazil's Nota Fiscal Eletrônica and Mexico's Comprobante Fiscal Digital por Internet (CFDI) are frequently cited as pioneering examples of digital tax administration (OECD, 2023).

Empirical evidence suggests that electronic invoicing increases tax compliance, reduces opportunities for fraud, improves monitoring capacity, and increases transaction transparency.

For informal enterprises, digital taxation systems create incentives for institutional integration while simultaneously increasing economic visibility.

However, the literature emphasizes that compliance costs remain important. Small enterprises may face difficulties adapting to digital reporting requirements because of limited technological resources and administrative capabilities (Williams, 2023).

Consequently, successful digital taxation reforms often combine enforcement mechanisms with technical support and simplification measures.

Platform work exposes a central regulatory ambiguity: workers may be legally independent while platforms exercise substantial control over pricing, task allocation, evaluation, and discipline (Wood et al., 2019; De Stefano, 2022). Regulatory responses range from contractor models to employee classification and intermediate categories. The European Union's Platform Work Directive and Spain's Rider Law emphasize employment classification and algorithmic transparency, whereas many Latin American initiatives place greater weight on digital inclusion, tax administration, and entrepreneurship. Across regions, the evidence indicates that regulatory design and institutional capacity condition whether greater digital visibility translates into stronger protection or only partial integration (ILO, 2021; European Parliament & Council of the European Union, 2024).

Evidence on AI and blockchain is substantially less mature than evidence on platforms, fintech and e-government. This section therefore distinguishes documented applications—especially algorithmic management—from prospective uses in measurement, compliance and formalization.

A growing body of research examines the implications of AI for employment and labour markets (Autor, 2015, pp. 3–30; Acemoglu & Restrepo, 2019, pp. 3–30; Brynjolfsson & McAfee, 2014).

Research on AI and labour markets commonly distinguishes three channels—automation, augmentation, and organizational reconfiguration—but the magnitude and distribution of these effects remain context-dependent, and their specific consequences for informal employment are much less firmly established (Acemoglu & Johnson, 2023; OECD, 2021):

Three channels provide a useful organizing framework: automation, which refers to the substitution of routine cognitive or manual tasks; augmentation, in which AI complements human labour by increasing productivity or supporting decision-making; and organizational reconfiguration, through which AI changes organizational structures and employment relationships.

These mechanisms provide a useful basis for formulating hypotheses about informal employment, but direct empirical evidence on their effects within informal labour markets remains limited.

Historically, informal employment has been concentrated in labour-intensive sectors characterized by relatively low levels of technological adoption (ILO, 2018). However, digital platforms increasingly incorporate AI into operational processes.

Examples include:

• dynamic pricing systems;
• automated worker evaluation;
• customer matching algorithms;
• predictive demand forecasting.

Within platform economies, algorithmic systems already play a documented role in functions such as matching, pricing, performance evaluation, and demand forecasting. This evidence is stronger than the evidence concerning the broader effects of recent AI systems on informality as a whole.

Table 5. Potential Effects of Artificial Intelligence on Informal Employment

Mechanism	Hypothesized Opportunities	Hypothesized Risks
Automation	Productivity gains	Job displacement
Matching algorithms	Better labour-market access	Increased platform dependence
Predictive analytics	Improved business decisions	Surveillance
Digital assistants	Entrepreneurial support	Digital inequality
Automated compliance systems	Easier formalization	Exclusion of digitally disadvantaged workers

Source: Prospective analytical synthesis informed by Autor (2015), Acemoglu and Restrepo (2019), and Brynjolfsson and McAfee (2014). The opportunity/risk entries are hypotheses derived from mechanisms discussed in the broader technology-and-labour literature; they are not classifications or demonstrated causal effects for informal employment. Their evidentiary status is therefore limited pending direct comparative research on informal workers and enterprises.

Accordingly, Table 5 should be read as a research framework rather than as a summary of demonstrated causal effects. Existing labour-market research identifies plausible channels through which AI could generate both opportunities and risks, but comparative evidence specific to informal workers remains insufficient to determine their prevalence, magnitude, or net effect.

A particularly significant development in the platform economy is the expansion of algorithmic management.

Whereas conventional management relies primarily on human supervisors, digital platforms increasingly use algorithms to perform managerial functions.

Research on algorithmic management identifies task allocation, worker evaluation, pricing, behavioural monitoring and discipline as central mechanisms of digitally mediated control (Wood et al., 2019, pp. 56–75; Kellogg et al., 2020, pp. 366–410; Rosenblat, 2018).Empirical research on platform work documents concerns regarding transparency, information asymmetries, monitoring, and accountability. Claims about efficiency gains are more context-dependent and should not be assumed to apply uniformly across platforms or workers.

Workers often lack information concerning:

• how algorithms operate;
• how ratings are calculated;
• how disciplinary decisions are made.

This informational asymmetry may reinforce vulnerabilities associated with hybrid informality.

Figure 1. Algorithmic Governance in Platform Work

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This framework summarizes a comparatively well-documented feature of platform labour: algorithmic systems can perform managerial functions that shape task allocation, evaluation, and access to work. The consequences for workers vary across platforms and regulatory settings.

Blockchain may support secure records, identity, property registries, or transaction traceability, while machine-learning methods can process platform, payment, and administrative data. Yet robust comparative evidence that either technology improves formalization or produces more valid estimates of informality than established systems remains limited. Most blockchain applications are experimental, and AI-based measurement raises additional concerns about representativeness, privacy, transparency, bias, and accountability. These technologies should therefore be evaluated against conventional registries, surveys, and administrative systems rather than assumed to be superior (Jovanovic et al., 2022; Zuboff, 2019).

The governance of AI and platform work also differs across institutional contexts.

In the European Union, regulatory initiatives emphasize worker rights, data protection, algorithmic transparency, and AI governance. This orientation is reflected in recent EU legislation and policy initiatives (European Parliament & Council of the European Union, 2024).

The Platform Work Directive and the AI Act represent important examples of this strategy.

Across Latin America, policy agendas more often emphasize digital and financial inclusion, administrative modernization, and entrepreneurship promotion.

While several countries have developed sophisticated digital governance systems, regulatory frameworks addressing algorithmic management remain less developed (ILO, 2021).

Table 6. Digital Governance Priorities in the European Union and Latin America

Dimension	European Union	Latin America
Primary concern	Labour rights	Formalization
Digital taxation	Advanced	Expanding
Platform regulation	More institutionalized	Emerging / heterogeneous
Digital identity	Mature	Developing
AI regulation	More developed regulatory framework	Less developed/heterogeneous

Source: Author’s stylized comparative synthesis based on the European Parliament and Council of the European Union (2024), OECD (2023), and ILO (2021). The categories are comparative descriptors, not standardized indices. “Advanced/mature/more developed” denotes comparatively extensive institutionalization in the cited evidence (e.g., established legal/administrative frameworks and broad implementation); “expanding/developing/emerging” denotes active but uneven or incomplete institutionalization; “less developed/heterogeneous” denotes substantial cross-country variation and less comprehensive regional coverage. The table should therefore be read as a heuristic regional comparison rather than a country-level ranking.

These differences suggest a hypothesis for comparative research: emerging technologies may interact with hybrid informality differently across institutional contexts. Establishing this relationship requires systematic cross-country evidence rather than inference from regulatory design alone.

6. Critical Debate and Research Gaps

The literature converges most strongly on two findings. First, digitalization reorganizes and increases the visibility of informal activity without necessarily eliminating deficits in labour or social protection. Second, outcomes are institutionally contingent: similar technologies can produce different effects depending on administrative capacity, regulation, labour-market institutions and access to social protection (Berg et al., 2018; Wood et al., 2019; ILO, 2021; OECD, ILO, & European Union, 2023). Evidence is strongest for platform-mediated work and for the measurement problems created by multiple jobholding, cross-border work and restricted access to platform data.

The main analytical tension is between formalization and precarity. Digital payments, registration and electronic taxation can lower transaction costs and increase institutional visibility, while employment misclassification, algorithmic control and platform dependence may leave workers outside key protections (Wood et al., 2019; De Stefano, 2022). These processes can coexist, which is precisely the empirical pattern that the hybrid-informality framework seeks to organize. Evidence for the integrated concept is moderate: its component dimensions are documented, but the construct has not yet been systematically tested against alternative multidimensional or continuum-based frameworks.

Important gaps remain. Evidence is concentrated in ride-hailing, delivery and online freelancing, with fewer systematic studies of social-media commerce, content creation and mixed online-offline microenterprise. Longitudinal and causal evidence is scarce, definitions remain inconsistent, and private control of platform data limits comparability. Claims concerning AI, automated compliance and blockchain are especially tentative and should be treated as research propositions rather than established effects (Jovanovic et al., 2022; Zuboff, 2019).

7. Conclusion

Digitalization is transforming informal economic activity without producing a uniform transition to formality. The strongest evidence concerns platform work: digital visibility and algorithmic coordination can coexist with gaps in employment rights and social protection. Evidence also shows that statistical systems face growing classification and data-access problems as workers combine employment statuses, platforms and cross-border activities. Digital government, electronic invoicing and digital identity can facilitate institutional integration, but their effects depend on administrative capacity, regulatory quality and social-protection institutions. The concept of hybrid informality is therefore proposed as a testable framework for arrangements combining digital visibility, partial institutional integration and persistent protection deficits. Its comparative value relative to other multidimensional approaches remains to be established. Claims concerning AI, blockchain, and automated compliance should remain provisional: existing evidence supports experimentation and identifies plausible mechanisms, but does not yet establish systematic effects on informality or formalization. Future research should prioritize longitudinal and cross-country tests, access to platform data, multidimensional measurement, and explicit comparison of emerging technologies with established statistical and administrative tools.

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