Contemporary Studies 35 Informal Employment among Youth in the Post-War Northern Economy N. Balamurali 1 and Priyanga Dunusinghe 2 Introduction Sri Lanka has been regarded as a model of a country with successful social policies, yet for decades it has faced major challenges in providing employment and satisfying the other aspirations of youth. Although the labor force has become more educated, the main source of employment for both youth and adults remains the informal sector: a trend which is particularly marked among youth. Moreover, the importance of the informal sector as a source of employment has increased since the mid-1990s (Ramani, 2013). Today, there is renewed interest in the informal economy (IE) worldwide. It plays a major role in employment creation, production and income generation while the formal sector of the country cannot absorb all the labour force of the country into employments. IE has been rapidly expanded as an important sector both in terms of employment and contribution to national output. More than 70 per cent of Sri Lanka‘s labour force is employed in the informal sector, which comprises various economic activities in agriculture, fishing, livestock rearing, micro and small- scale enterprises, petty trade, and other small commercial activities (Arunatilake, 2010). This study aimed to find out the role of Informal Economy in the Northern Province. The Northern and the Eastern Provinces were severely affected by the protracted armed conflict in Sri Lanka. The final battlefield of the civil war was in the Northern Province. Hence, the unemployment related problems are common among youth in this region because a significant number of youth ex combatants were rehabilitated by the Government. Importantly, the IE plays an important role in the Northern Province as NGOs and Government institutions have been continuously engaging in reducing poverty and restoring livelihoods. Therefore, a larger proportion of youth tend to start their own income-generating activities with institutional support. This study started with the research problem when it was found that a larger share of employed youth in the Northern Province engages in IE. Hence, the researcher wanted to identify characteristics of youth who engage in the IE in the Northern Province’ Objective 1 Department of Social Studies, The Open University of Sri Lanka balamurali_navaratnam@yahoo.com 2 Department of Economics ,University of Colombo pmdunu@yahoo.com