Tackling the Propensity towards Undeclared Work: Some Policy Lessons from Croatia

South East European Journal of Economics and Business, Vol. 10, No.1, pp. 18-31, 2015

33 Pages Posted: 10 Jan 2017

See all articles by Colin Williams

Colin Williams

University of Sheffield - School of Management

Josip Franic

University of Sheffield - School of Management

Date Written: January 10, 2015

Abstract

The aim of this paper is to evaluate contrasting policy approaches towards undeclared work. To do so, evidence is reported from 1,000 face-to-face interviews conducted in Croatia during 2013. Logistic regression analysis reveals no association between participation in undeclared work and the perceived level of penalties and risk of detection, but a strong association between participation in undeclared work and the level of tax morality. It thus confirms recent calls for the conventional direct controls approach, which seeks to deter engagement in undeclared work by increasing the penalties and risk of detection, to be replaced by an indirect controls approach which seeks to improve tax morality so as to encourage greater self-regulation and a culture of commitment to compliance. The implications for theory and policy are then discussed.

Keywords: Informal Sector, Tax Morale, Institutional Theory, Tax Evasion, Croatia, South-East Europe

JEL Classification: E26, H26, J46, J48, K34, K42, O17, P37

Suggested Citation

Williams, Colin and Franic, Josip, Tackling the Propensity towards Undeclared Work: Some Policy Lessons from Croatia (January 10, 2015). South East European Journal of Economics and Business, Vol. 10, No.1, pp. 18-31, 2015, Available at SSRN: https://ssrn.com/abstract=2883475

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

Josip Franic

University of Sheffield - School of Management ( email )

9 Mappin Street
Sheffield, S1 4DT
United Kingdom

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