Explaining Participation in the Informal Economy: An Institutional Incongruence Perspective

International Sociology, Vol. 30, No. 3, pp. 294-313, 2015

17 Pages Posted: 10 Jan 2017

See all articles by Colin Williams

Colin Williams

University of Sheffield - School of Management

Ioana Alexandra Horodnic

Alexandru Ioan Cuza University of Iasi

Jan E. Windebank

University of Sheffield - Department of French

Date Written: January 5, 2015

Abstract

Drawing inspiration from institutional theory, a small sub-stream of literature has proposed that participation in the informal economy arises from the lack of alignment of a society’s formal institutions (i.e. its codified laws and regulations) with its informal institutions (i.e. the norms, values and beliefs of its population). To further advance this explanation, this article reports a 2013 Eurobarometer survey involving 27,563 face-to-face interviews across 28 European countries. The finding is that there is a strong association between the degree to which formal and informal institutions are unaligned and participation in the informal economy. The greater is the asymmetry between the formal and informal institutions, the more likely is participation in the informal economy at the individual-, population group- and country-level. A new policy approach for tackling the informal economy which focuses upon reducing this institutional incongruence is then discussed.

Keywords: European Union, Informal Employment, Informal Sector, Institutional Theory, Undeclared Economy

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

Suggested Citation

Williams, Colin and Horodnic, Ioana Alexandra and Windebank, Jan E., Explaining Participation in the Informal Economy: An Institutional Incongruence Perspective (January 5, 2015). International Sociology, Vol. 30, No. 3, pp. 294-313, 2015, Available at SSRN: https://ssrn.com/abstract=2883476

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

Ioana Alexandra Horodnic

Alexandru Ioan Cuza University of Iasi ( email )

Bulevardul Carol I nr. 22
Iasi, 700505
Romania

Jan E. Windebank

University of Sheffield - Department of French ( email )

United Kingdom
(0114) 222 4888 (Phone)

HOME PAGE: http://www.shef.ac.uk/french/staff/jwindebank.html

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