Tackling Undeclared Work in the European Union

19 Pages Posted: 19 Aug 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: August 14, 2019

Abstract

Undeclared work represents a persistent feature of contemporary economies and results in lost public revenue, lack of worker protection and unfair competition for legitimate businesses. Conventionally, undeclared work has been viewed as an individual criminal act, which is solved by governments increasing the penalties and risks of detection in order to discourage participation. This, however, only deals with the outcome (i.e., participation in undeclared work) and does not address the drivers of this behaviour. This report explores the formal institutional failures which make undeclared work an acceptable behaviour in the eyes of citizens and, consequently, result in high participation in undeclared work. Addressing these institutional failures is important in order to tackle the determinants of undeclared work. This report investigates what policy measures are effective by exploring in turn the views of citizens, businesses and policy makers. The finding is that, despite the increasing importance attributed by the governments to deterrent measures, both citizens and businesses are influenced by other factors when deciding whether to participate in undeclared work. Thus, to tackle undeclared work in a more effective manner, preventative measures and measures aimed at fostering trust need to complement deterrent measures.

Keywords: undeclared work; rational economic actor approach; social actor approach; tax morale; vertical trust; horizontal trust

Suggested Citation

Horodnic, Ioana Alexandra and Williams, Colin, Tackling Undeclared Work in the European Union (August 14, 2019). Available at SSRN: https://ssrn.com/abstract=3437406 or http://dx.doi.org/10.2139/ssrn.3437406

Ioana Alexandra Horodnic (Contact Author)

Alexandru Ioan Cuza University of Iasi ( email )

Bulevardul Carol I nr. 22
Iasi, 700505
Romania

Colin Williams

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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