Beyond the marginalization thesis: Evaluating the participation of the formally employed in the shadow economy in the European Union

Abstract

Purpose

Grounded in an emergent recognition that those people in formal employment conduct the vast majority of work in the shadow economy, the purpose of this paper is to evaluate for the first time the degree to which shadow work is conducted by those in formal jobs and the characteristics of those in formal employment who participate in the shadow economy.

Design/methodology/approach

To do this, the authors report a 2007 survey of participation in the shadow economy involving 26,659 face-to-face interviews conducted in 27 European Union (EU) member states.

Findings

The finding is that in the EU, the formally employed undertake a disproportionate share of work in the shadow economy. Analysing the characteristics of the employed most likely to work in the shadow economy, however, it is those who benefit least from the formal economy, namely, younger unmarried men and on lower incomes living in rural areas, working in the construction sector and in small firms.

Research limitations/implications

The outcome is a tentative call for recognition that although people in formal employment conduct the vast majority of work in the shadow economy, these are mostly particular vulnerable and weaker groups of the formally employed. Whether similar findings prevail at other spatial scales and in other global regions now needs investigating.

Practical implications

This survey displays the need for policy not to target the unemployed but particular groups of the formally employed.

Originality/value

The first extensive evaluation of the extent to which shadow work is conducted by those in formal jobs and the characteristics of those in formal employment who participate in the shadow economy.

Citation

Williams, C.C. and Horodnic, I.A. (2016), "Beyond the marginalization thesis: Evaluating the participation of the formally employed in the shadow economy in the European Union", Journal of Economic Studies, Vol. 43 No. 3, pp. 400-417. https://doi.org/10.1108/JES-06-2014-0105