Evaluating the Variations in Undeclared Work in the EU-27
Journal of Economy and Its Applications, Vol. 2, No. 2, pp. 20-39, 2012
20 Pages Posted: 30 Jun 2013
Date Written: 2012
Drawing upon the results of 26,659 face-to-face interviews in the 27 member states of the European Union (EU-27), the aim of this paper is to evaluate its varying magnitude and whether such work is mostly wage-based (of an envelope wage or undeclared variety) or own-account work (of a market-oriented or solidarity-oriented variety). The finding is that in ‘welfare capitalist’ work and welfare regimes, which are more equal (measured by the gini coefficient) pursue more extensive labour market interventions, have higher levels of social protection and greater state redistribution, undeclared economies are smaller and are composed mostly of solidarity-oriented own-account work. Meanwhile, in ‘neo-liberal’ regimes which are more unequal, with less labour market intervention, social protection and redistribution via social transfers, undeclared economies are larger and are composed largely of envelope wage arrangements. The paper concludes by discussing the theoretical and policy implications.
Keywords: informal employment, informal sector, underground economy, neo-liberalism, welfare regimes, European Union
JEL Classification: O26
Suggested Citation: Suggested Citation