Which of the following best explains why undocumented workers are often part of an economy's informal sector?

• A. They lack legal authorization to work, so they are more likely to take jobs that are not officially recorded or regulated.
• B. They typically have higher levels of education, making them more competitive in formal labor markets.
• C. They are usually employed by government agencies, which are part of the informal sector.
• D. They are required by law to pay higher taxes, so they avoid formal employment.

Answer: (A)

Verified step by step guidance

1. Understand the definition of the informal sector: It consists of economic activities that are not regulated by the government, often unrecorded and untaxed.
2. Recognize that undocumented workers lack legal authorization to work, which limits their access to formal employment opportunities.
3. Analyze why lacking legal work authorization leads to participation in the informal sector: Employers may hire undocumented workers off the books to avoid legal penalties, and workers accept these jobs because formal jobs are inaccessible.
4. Evaluate the incorrect options by considering typical characteristics of undocumented workers and the nature of formal vs. informal employment.
5. Conclude that the best explanation is that undocumented workers are more likely to take jobs that are not officially recorded or regulated due to their lack of legal authorization.