Eliminating Undeclared Work: Beyond a Deterrence Approach
Journal of Economic Studies, Vol. 32, No. 5, pp. 435-449, 2005
15 Pages Posted: 8 Jul 2013
Date Written: 2005
Viewing undeclared work as market-like activity conducted for monetary gain, and participation as a rational economic decision, the widespread public policy response has been to seek to deter engagement in such work by ensuring that the expected cost of being caught and punished is greater than the economic benefit of participating. Reviewing recent research, it is revealed that although some undeclared work is market-like and conducted for unadulterated economic reasons, a large proportion is carried out under relations and for motives more akin to unpaid mutual aid, especially in deprived populations. Evaluating the implications of this finding for a deterrence approach, the argument is that rather than simply seek to eliminate such paid mutual aid through deterrence, a more refined approach is required that combines deterrence with initiatives to facilitate the legitimisation of such work. How this might be achieved is then outlined.
Keywords: informal economy, informal sector, informal employment, hidden economy, shadow economy, underground sector, public policy, tax evasion, tax compliance, economics, temporary workers, crimes
JEL Classification: O17, H26, H31, K42
Suggested Citation: Suggested Citation