What term refers to the economic system where workers are self-employed and work without formal contracts?

The term that accurately describes the economic system where workers are self-employed and operate without formal contracts is the informal economy. This encompasses various forms of employment that are not regulated by the state or covered by labor laws, often lacking formal recognition. Workers in this economy may engage in sporadic jobs or services that do not have traditional employment characteristics, such as benefits or consistent work hours.

The informal economy typically includes not just freelance or gig work, but also any unregulated or unregistered employment practices. This highlights the broader range of work scenarios that fall outside legal frameworks, which is a key characteristic distinguishing it from more defined categories like freelance or gig economies that might employ some sort of informal arrangement but often with distinct characteristics like task-based jobs.

While freelance and gig economies do capture aspects of self-employment, they imply a more organized structure focused on specific projects or tasks, often through platforms that connect workers with clients. Contract labor refers to work that is based on a formal agreement between an employer and an employee, which contrasts sharply with the concept of informal economies where such contracts are absent.