Informal sectors in Indonesia are considered as a concern. Informal sector put the worker in
the idle condition and part of poverty. International Labor Organization-ILO (Satish C.
Mishra, 2010) concluded that the emergence of the informal economic sector is due to the
Indonesian labor market regulations and the inadequacy for growth as well as the increase of
inequality in Indonesia. The literature review will explore the different definitions of
informality, as well as the consensus of informality and what type of informal sector that is
going to be used in this research. The research aims to discuss how big and how complicated
is the trap of informality that exists in Indonesia, the benefactor, including the policy
application on the meso level. The policy that allows providing an incentive to the new
entrepreneurs but have not been implemented by the government (Mirzanti, Simatupang, &
Larso, 2015). This research is limited to the condition of informality trap in Indonesia.