Institutional Asymmetry and the Acceptability of Undeclared Work

SHADOWS Working Paper no. 01-2019

55 Pages Posted: 12 Feb 2019

See all articles by Ioana Alexandra Horodnic

Ioana Alexandra Horodnic

Alexandru Ioan Cuza University of Iasi

Colin Williams

University of Sheffield - School of Management

Date Written: January 31, 2019


This report is part of the project SHADOWS which aims to investigate the effectiveness of different policy measures in reducing undeclared work. As such, the project evaluates not only the effectiveness of using a rational economic actor approach (that tackles undeclared work by ensuring that the payoff from undeclared work is outweighed by the costs), and a social actor approach (grounded in a view that undeclared work arises when tax morale is low), but also analyses the interaction effects (between deterrents and tax morale, and vertical and horizontal trust) in various contexts. This report focuses on the social actor approach, which is grounded in institutional theory, and aims to produce a more nuanced and variegated deeper understanding of citizens views on horizontal and vertical trust and the determinants of their tax morale. Which institutions and who do citizens not trust, and why? What causes trust and distrust? Does vertical trust influence horizontal trust, or is it the other way around? Under what circumstances is undeclared work deemed acceptable by citizens? And what are the main narratives on accepting and/or participating in undeclared work? Are these similar in different contexts?

To answer these questions, the report briefly reviews how scholarship on participation in undeclared work has increasingly adopted the lens of institutional theory, and three waves of thought in institutional theory will be outlined regarding how to explain citizens` participation in undeclared work (Williams, 2017). This will be followed by a methodological section of the qualitative research conducted where details about the country case studies will be provided (as well as the type of questions used to investigate the issues). The third section then reports the results obtained using in-depth-interviews, focusing on how tax morale and trust in public institutions and/or in other citizens are shaped by formal institutional failings. The results will be structured into four main categories of formal institutional failure, namely: resource misallocations and inefficiencies; formal institutional voids and weaknesses; formal institutional powerlessness; and formal institutional instability and uncertainty (Williams, 2017). The report concludes with the policy implications of the findings.

Keywords: undeclard work; institutional asymmetry; formal institutional failings; vertical trust; horizontal trust.

Suggested Citation

Horodnic, Ioana Alexandra and Williams, Colin, Institutional Asymmetry and the Acceptability of Undeclared Work (January 31, 2019). SHADOWS Working Paper no. 01-2019, Available at SSRN: or

Ioana Alexandra Horodnic (Contact Author)

Alexandru Ioan Cuza University of Iasi ( email )

Bulevardul Carol I nr. 22
Iasi, 700505

Colin Williams

University of Sheffield - School of Management ( email )

15 Conduit Road
Sheffield, S10 1FL
United Kingdom

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