In Nepal the labour force is increasing day by day with the population growth
rate by 1.35 percent per year. It is estimated that 400,000 labour force is
introducing each year into the market for searching work. Due to the lack of
employment opportunity in formal sector, majority of them find shelter in the
informal economy in the absence of sluggish growing formal economy. Most
of the people are engaged in the informal sector that has varying effects on
them in terms of employment and income generation. The nature of
occupations in informal sector is heterogeneity and variation in terms of
earning, mobility, security, differ in seasonality etc. we find variation of
earning function in different occupation in the sector. The occupational
classification of informal sector activities shows us that the development status
of our country is very low compare to other countries. Under this study it is
inferred that although the informal activities are diversified between rural and
urban areas, various other characteristics suggest that there is a tendency to
engage in more productive enterprises even within informal sector. The nature
of activities in which they get engaged and the size of the activities which they
try to take forward be the main characteristics in informal sector. This study
also tries to compare the nature and characteristics of informal sector at
national level. The government must play effective role for better development
of the informal sector. To identify the informal economy in Nepal a national
wide and regular survey should be necessary before to apply any policy for
this sector.