Waste picking is an informal economy activity that has attracted a large amount of research across the social sciences. We contribute to the debate on informality and its institutional determinants through case study analysis. We present a unique partnership between waste pickers and firms operating in Colombia called Proyecto Pensilvania. We argue that two specific sets of laws made this partnership possible. The first grants legal recognition to the activity pursued by the waste pickers, who become “waste entrepreneurs.” This is a key initial step to bring informal sector workers into the realm of the formal economy. The second grants special legal protection to the associations of waste pickers when they compete for inclusion in the local waste management plans. This is a way to incentivize waste pickers to join associations. Proyecto Pensilvania decreases transaction costs, generates income for disenfranchised groups of individuals and limits environmental degradation. The regulatory reforms that led to its establishment can be imitated by other countries with sizable waste picker populations.
|Man and the Economy The journal of The Coase Society
|Published - Oct 15 2016