To read this content please select one of the options below:

Beyond the formal/informal employment dualism: evaluating individual- and country-level variations in the commonality of quasi-formal employment

Colin Williams (School of Management, University of Sheffield, Sheffield, UK)
Besnik Krasniqi (Economics, University of Prishtina, Prishtina, Republic of Kosovo)

International Journal of Social Economics

ISSN: 0306-8293

Article publication date: 31 May 2021

Issue publication date: 18 August 2021

150

Abstract

Purpose

To transcend the view of employment as either formal or informal, this paper evaluates the prevalence of quasi-formal employment where formal employers pay formal employees an unreported (“envelope”) wage in addition to their formal reported salary. To explain the individual-level variations in quasi-formal employment, the “marginalisation” thesis is evaluated that this practice is more prevalent among vulnerable groups and to explain the country-level variations, and a neo-institutionalist theory is evaluated that it is more prevalent where formal institutional failures lead to an asymmetry between the formal laws and regulations and the unwritten socially shared rules of informal institutions.

Design/methodology/approach

To evaluate the individual- and country-level variations in the prevalence of quasi-formal employment, a multi-level logistic regression is provided of data from special 2019 Eurobarometer survey 92.1 involving 11,793 interviews with employees across 28 European countries (the 27 member states of the European Union and the United Kingdom).

Findings

Of the 3.5% of employees (1 in 28) who receive under-reported salaries, the marginalisation thesis is supported that it is largely vulnerable population groups. So too is the neo-institutionalist explanation that quasi-formal employment is more common in countries where the non-alignment of formal and informal institutions is greater, with the formal institutional failings producing this identified as lower levels of economic development, less modernised state bureaucracies and lower levels of taxation and social protection.

Practical implications

The policy implication is that tackling quasi-formal employment requires not only enforcement authorities to improve the risk of detection of this illegal wage practice but also governments to change wider macro-level structural conditions. These are outlined.

Originality/value

Contemporary new evidence is provided of the prevalence of quasi-formal employment along with how this illegal wage practice can be explained and tackled.

Keywords

Citation

Williams, C. and Krasniqi, B. (2021), "Beyond the formal/informal employment dualism: evaluating individual- and country-level variations in the commonality of quasi-formal employment", International Journal of Social Economics, Vol. 48 No. 9, pp. 1290-1308. https://doi.org/10.1108/IJSE-01-2021-0059

Publisher

:

Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited

Related articles