In economic language, the transition of a worker or a company from the informal to the formal economy is known as formalization (labor or business).[1]​ Policies that aim to achieve or accelerate this transition are called "formalization policies." The formalization of a company requires that it be registered in the corresponding registry and comply with its tax and labor obligations. The formalization of a worker requires, in turn, that he be registered (normally in a different registry; depending on the countries and sectors, this registration can be carried out by the worker himself, or by his employer) and start contributing to the social security system.

Also known as formalization (urban) is the transformation of informal settlements (shantytowns, favelas, ranchitos) into spaces integrated within the urban fabric, with electricity supply, water, sewage, paved access, inclusion of properties in the city cadastre and its inhabitants in the census "Census (statistics)").

For these processes, the term "regularization" is also often used (regularization of workers, regularization of settlements). However, it is common to use "regularization" to designate the process by which irregular immigrants become full citizens of the country to which they have arrived.[2]​.

Overcoming informality (and therefore achieving formalization) is considered to be the main development challenge for the entire world[1]​ and also an essential issue for social cohesion and the achievement of peace.[1]​ Informality reduces the income of the State[3]​ and of workers, and is among the factors originating in the poverty trap.[4]​ Regarding workers, it constitutes the third part of sustainable development goal No. 8: "Promote growth sustained, inclusive and sustainable economy, full and productive employment and decent work for all. Regarding settlements, it is directly related to goal 11: “Make cities and human settlements inclusive, safe, resilient and sustainable.”

The Decent Work Program of the International Labor Organization (ILO) aims to achieve "the transition from the informal economy to the formal economy."[1]​ It is organized by country.[5]​.

The ILO[1]​ recommends these 7 ways: