Cross-National Variations in the Under-Reporting of Wages in South-East Europe: A Result of Over-Regulation or Under-Regulation?

The South East European Journal of Economics and Business, Vol. 7, 2012, No. 1, pp. 53-61.

9 Pages Posted: 21 Dec 2015

See all articles by Colin Williams

Colin Williams

University of Sheffield - School of Management

Date Written: 2012

Abstract

This paper seeks to explain the cross-national variations in the tendency of employers in South East Europe to under-report the wages of their employees by paying them two wages, an official declared salary and an additional undeclared envelope wage. Reporting the results of a 2007 Eurobarometer survey of this practice undertaken in five South East European countries, the finding is that the commonality of this illicit wage practice markedly varies cross-nationally, with 23 percent of formal employees in Romania but just 3 percent in Cyprus receiving an under-reported salary. Finding that the under-reporting of wages is more prevalent in neo-liberal economies with lower levels of state intervention and less common in more ‘welfare capitalist’ economies in which there is greater state intervention in work and welfare, the resultant conclusion is that the under-reporting of employees wages by employers is correlated with the under- rather than over-regulation of work and welfare.

Keywords: undeclared work, informal economy, under-reported employment, envelope wages, tax compliance, tax evasion, South-East Europe

JEL Classification: E26, M26, O17, K42

Suggested Citation

Williams, Colin, Cross-National Variations in the Under-Reporting of Wages in South-East Europe: A Result of Over-Regulation or Under-Regulation? (2012). The South East European Journal of Economics and Business, Vol. 7, 2012, No. 1, pp. 53-61., Available at SSRN: https://ssrn.com/abstract=2706159

Colin Williams (Contact Author)

University of Sheffield - School of Management ( email )

15 Conduit Road
Sheffield, S10 1FL
United Kingdom

HOME PAGE: http://https://www.sheffield.ac.uk/management/staff/williams/index

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