The Commonality of Envelope Wages in Eastern European Economies
Eastern European Economics, Vol. 47, No. 2, pp. 37-52, 2009
16 Pages Posted: 14 Dec 2015
Date Written: 2009
This paper evaluates the commonality in Eastern European economies of the employment practice whereby formal employers pay their formal employees both a declared wage and an undeclared ‘envelope wage’. Until now, little survey evidence has been available. Here, an extensive Eurobarometer survey involving 10,171 face-to-face interviews in Eastern European economies conducted in 2007 is reported. The finding is that 1 in 10 formal employees had received envelope wages in the previous year amounting to on average two-fifths of their gross annual wage and this is found to be a ubiquitous practice, albeit one that is more common in some countries, sectors, occupations and population groups than others. The paper concludes by calling for a more in-depth evaluation of this wage practice in Eastern Europe and greater discussion of how this arrangement might be tackled.
Keywords: shadow economy, informal sector, undeclared work, envelope wages, tax compliance, Eastern Europe, European Union
JEL Classification: H26, J46, K42, O17, P3
Suggested Citation: Suggested Citation