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Article
Publication date: 8 July 2020

Colin Williams and Brunilda Kosta

The purpose of this paper is to explain who purchases undeclared home repairs and renovations and their motives to tackle the cash-in-hand consumer culture. The…

Abstract

Purpose

The purpose of this paper is to explain who purchases undeclared home repairs and renovations and their motives to tackle the cash-in-hand consumer culture. The conventional view has been that undeclared home repairs and renovations are sought by those consumers needing to save money and desiring a lower price. Here, this is evaluated critically.

Design/methodology/approach

To do so, evidence from a 2019 Eurobarometer survey involving 27,565 face-to-face interviews in 28 European countries is reported.

Findings

The finding is the need for a nuanced and variegated understanding of who purchases undeclared home repairs and renovations and why. Lower price is their sole rationale in just 25% of purchases, one of several rationales in 34% of cases and not a reason in the remaining 42% of purchases. Besides a lower price, consumers purchase undeclared not only unintentionally but also to circumvent the failings of formal sector provision in terms of its availability, speed and quality, as well as for social and redistributive rationales.

Practical implications

To reduce the cash-in-hand consumer culture, not only are incentives needed to persuade consumers to purchase declared along with awareness-raising campaigns about the benefits of purchasing declared services but initiatives are also needed to improve the availability, speed, reliability and quality of formal provision and to address undeclared purchases conducted for social and redistributive purposes.

Originality/value

This paper improves understanding of how governments can stop consumers asking “how much for cash” and reduce demand for undeclared home repair and renovation services.

Details

Journal of Financial Management of Property and Construction , vol. 25 no. 3
Type: Research Article
ISSN: 1366-4387

Keywords

Article
Publication date: 15 November 2018

Ioana Alexandra Horodnic and Colin C. Williams

When tackling the informal economy, an emergent literature has called for the conventional rational economic actor approach (which uses deterrents to ensure that the costs…

Abstract

Purpose

When tackling the informal economy, an emergent literature has called for the conventional rational economic actor approach (which uses deterrents to ensure that the costs of undeclared work outweigh the benefits) to be replaced or complemented by a social actor approach which focusses upon improving tax morale. The purpose of this paper is to explore the effectiveness of these two policy approaches in reducing informal sector entrepreneurship.

Design/methodology/approach

To evaluate this, data are reported from a 2015 representative survey involving 1,384 face-to-face interviews with owners or managers of small businesses in three South-Eastern European countries, namely, Croatia, Bulgaria and FYR Macedonia.

Findings

The findings provide support for the “social actor” approach and display that small businesses have a greater propensity to perceive competitors as operating informally when the level of tax morale is lower. Meanwhile, no support for the deterrence measures of the “rational economic actor” model is reported.

Research limitations/implications

The major limitation of the study is that the paper is not able to display the reasons for the low level of tax morale and horizontal trust. Therefore, further in-depth qualitative research is necessary to explain whether and how the low levels of trust are determined by the failures of various formal institutions.

Originality/value

This is the first known study on small businesses which analyses simultaneously two distinct policy approaches that aim to reduce participation in informal entrepreneurship.

Details

Journal of Small Business and Enterprise Development, vol. 26 no. 4
Type: Research Article
ISSN: 1462-6004

Keywords

Article
Publication date: 11 September 2017

Colin C. Williams, Ioana Alexandra Horodnic and Jan Windebank

To transcend the current debates about whether participation in the informal sector is a result of informal workers “exclusion” or their voluntary “exit” from the formal…

Abstract

Purpose

To transcend the current debates about whether participation in the informal sector is a result of informal workers “exclusion” or their voluntary “exit” from the formal sector, the purpose of this paper is to propose and evaluate the existence of a dual informal labour market composed of an exit-driven “upper tier” and exclusion-driven “lower-tier” of informal workers.

Design/methodology/approach

To do this, data from a 2013 Eurobarometer survey involving 27,563 face-to-face interviews across the European Union is reported.

Findings

The finding is that in the European Union, there is a dual informal labour market with those participating in the informal sector due to their exclusion from the formal sector being half the number of those doing so to voluntarily exit the formal sector. Using a logistic regression analysis, the exclusion-driven “lower tier” is identified as significantly more likely to be populated by the unemployed and those living in East-Central Europe and the exit-driven “upper tier” by those with few financial difficulties and living in Nordic nations.

Research limitations/implications

The results reveal the need not only to transcend either/or debates about whether participants in the informal sector are universally exclusion-or exit-driven, and to adopt a both/and approach that recognises a dual informal labour market composed of an exit-driven upper tier and exclusion-driven lower tier, but also for wider research on the relative sizes of these two tiers in individual countries and other global regions, along with which groups populate these tiers.

Originality/value

This is the first evaluation of the internal dualism of the informal sector in the European Union.

Details

Journal of Economic Studies, vol. 44 no. 4
Type: Research Article
ISSN: 0144-3585

Keywords

Article
Publication date: 31 May 2018

Colin Charles Williams and Slavko Bezeredi

To transcend the long-standing debate regarding whether workers are driven into the informal economy by either their involuntary “exclusion” or voluntary “exit” from the…

Abstract

Purpose

To transcend the long-standing debate regarding whether workers are driven into the informal economy by either their involuntary “exclusion” or voluntary “exit” from the formal economy, the purpose of this paper is to propose and evaluate the existence of a dual informal labour market composed of an exit-driven “upper tier” and an exclusion-driven “lower-tier” of informal workers, and to explore its policy implications.

Design/methodology/approach

To do so, data are reported from a 2015 survey of the informal economy conducted in South-East Europe involving 6,019 face-to-face interviews in Bulgaria, Croatia and FYR Macedonia.

Findings

Identifying a dual informal labour market with three exit-driven informal workers for every exclusion-driven informal worker, a multinomial logit regression analysis reveals that, compared to the exclusion-driven “lower tier”, the exit-driven “upper tier” is significantly more likely to be populated by the formally employed, retired and those not struggling financially. Participation is not affected by the perceived severity of penalties and likely risks of detection, but relative to those in the exclusion-driven “lower tier”, there is a significant correlation between those doing so for exit rationales and their lack of both horizontal trust and vertical trust in formal institutions.

Practical implications

The outcome is a call to transcend the conventional deterrence approach of increasing the penalties and risks of detection. Instead, to tackle those driven by exit rationales, tackling both the lack of horizontal trust that other citizens are operating in a compliant manner and the lack of vertical trust in formal institutions is advocated. To tackle exclusion-driven informal workers, meanwhile, a focus upon the macro-level economic and social conditions which lead to their participation is required.

Originality/value

This is the first paper to empirically evaluate the existence of a dual informal labour market and to evaluate its policy implications.

Details

Employee Relations, vol. 40 no. 5
Type: Research Article
ISSN: 0142-5455

Keywords

Article
Publication date: 6 November 2017

Colin C. Williams, Ioana Alexandra Horodnic and Jan Windebank

Participation in the informal economy has been predominantly explained from a supply side perspective by evaluating the rationales for people working in this sphere…

Abstract

Purpose

Participation in the informal economy has been predominantly explained from a supply side perspective by evaluating the rationales for people working in this sphere. Recognising that many transactions in the informal economy are often instigated by customers, exemplified by purchasers asking “how much for cash?”, the purpose of this paper is to explain the informal economy from a demand-side perspective by evaluating citizens’ rationales for making purchases in the informal economy. Here, the authors test three potential explanations for acquiring goods and services in the informal economy, grounded in rational economic actor, social actor and formal economy imperfections theoretical perspectives.

Design/methodology/approach

To do this, a 2013 Eurobarometer survey, involving 27,563 face-to-face interviews conducted in 28 European Union member states is reported.

Findings

The finding is that all three rationales apply but the weight given to each varies across populations. A multinomial logit regression analysis then pinpoints the specific groups variously using the informal economy to obtain a lower price, for social or redistributive rationales, or due to the failures of the formal economy in terms of the availability, speed and quality of provision.

Practical implications

The outcome is to reveal that the conventional policy approach of changing the cost/benefit ratios confronting purchasers will only be effective for those purchasers citing a lower price as their prime rationale. Different policy measures will be required for those making informal economy purchases due to the shortcomings of the formal economy, and for social ends. These policy measures are then discussed.

Originality/value

The value and originality of this paper is that it explains participation in the informal economy from a purchaser, rather than the predominant supplier, perspective.

Details

International Journal of Social Economics, vol. 44 no. 11
Type: Research Article
ISSN: 0306-8293

Keywords

Article
Publication date: 5 June 2017

Colin C. Williams and Ioana A. Horodnic

The purpose of this paper is to evaluate who engages in informal work. The intention in doing so is to analyse whether important causal factors of social exclusion such as…

Abstract

Purpose

The purpose of this paper is to evaluate who engages in informal work. The intention in doing so is to analyse whether important causal factors of social exclusion such as age, education, gender and employment status influence participation in informal work in the European Union.

Design/methodology/approach

To do this, a 2013 Eurobarometer survey of who participates in undeclared work in 28 European member states is reported.

Findings

Using multilevel mixed-effects logistic regression analysis, the finding is that although some marginalised groups (the unemployed, those having difficulties paying their household bills, the working class and younger age groups) are significantly more likely to participate in the informal sector, others are not (those with less formal education and living in rural areas) and yet others (women and people in deprived European regions) are significantly less likely to participate.

Research limitations/implications

The outcome is a call for a nuanced and variegated understanding of the relationship between participation in the informal sector and social exclusion.

Practical implications

These results display the specific populations that need targeting when seeking to tackle informal work, revealing for example that the current the allocation of European funds for tackling informal work in poorer EU regions is mistaken, but that the targeting of the unemployed is not and current policy initiatives such as smoothing the transition from unemployment to self-employment worthwhile.

Originality/value

This is the first extensive evaluation of the relationship between participation in the informal sector and social exclusion at the level of the European Union

Details

International Journal of Manpower, vol. 38 no. 3
Type: Research Article
ISSN: 0143-7720

Keywords

Article
Publication date: 11 September 2017

Colin C. Williams and Ioana Alexandra Horodnic

To tackle one of the main negative consequences of the sharing economy, namely, the growth of the informal sector, the purpose of this paper is to evaluate for the first…

2517

Abstract

Purpose

To tackle one of the main negative consequences of the sharing economy, namely, the growth of the informal sector, the purpose of this paper is to evaluate for the first time the impacts of the informal sector on the hospitality industry and then to discuss what needs to be done to prevent the further growth of the informal sector in this industry.

Design/methodology/approach

To evaluate the impacts of the informal sector on the hospitality industry, data are reported from 30 East European and Central Asian countries collected in 2013 in the Business Environment and Enterprise Performance Survey.

Findings

The finding is that 23 per cent of hotels and restaurants in Eastern Europe and Central Asia report competing against unregistered or informal operators, and 13 per cent view these informal competitors as a major or severe obstacle. The larger the business, the greater is the likelihood that the informal sector is considered their biggest obstacle.

Practical implications

To prevent the further growth of the informal sector in the hospitality industry, regulation of the sharing economy will be required. To achieve this, it is shown that state authorities need to adopt both direct control measures that alter the costs of operating in the informal sector and the benefits and ease of operating formally, as well as indirect control measures that reduce the acceptability of operating in the informal sector.

Originality/value

This is the first paper to evaluate the impacts of the informal sector on the hospitality industry and to outline the policy measures required to prevent its further growth with the advent of the sharing economy.

Details

International Journal of Contemporary Hospitality Management, vol. 29 no. 9
Type: Research Article
ISSN: 0959-6119

Keywords

Article
Publication date: 31 May 2021

Colin Williams and Besnik Krasniqi

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…

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.

Details

International Journal of Social Economics, vol. 48 no. 9
Type: Research Article
ISSN: 0306-8293

Keywords

Open Access
Article
Publication date: 13 August 2021

Colin Williams and Jan Windebank

The aim of this paper is to evaluate contrasting ways of tackling self-employment in the informal sector. Conventionally, the participation of the self-employed in the…

Abstract

Purpose

The aim of this paper is to evaluate contrasting ways of tackling self-employment in the informal sector. Conventionally, the participation of the self-employed in the informal sector has been viewed as a rational economic decision taken when the expected benefits outweigh the costs, and thus enforcement authorities have sought to change the benefit-to-cost ratio by increasing the punishments and chances of being caught. Recently, however, neo-institutional theory has viewed such endeavor as a product of a lack of vertical trust (in government) and horizontal trust (in others) and pursued trust-building strategies to nurture voluntary compliance.

Design/methodology/approach

To evaluate these contrasting policy approaches, data are reported from special Eurobarometer survey 92.1 conducted in 2019 across 28 European countries (the 27 member states of the European Union and the United Kingdom) involving over 27,565 interviews.

Findings

Using probit regression analysis, the finding is that the likelihood of participation in informal self-employment is not associated with the level of expected punishments and chances of being caught, but is significantly associated with the level of vertical and horizontal trust, with a greater likelihood of participation in informal self-employment when there is lower vertical and horizontal trust.

Practical implications

The outcome is a call for state authorities to shift away from the use of repressive policy measures that increase the penalties and chances of being caught and toward trust-building strategies to nurture voluntary compliance. How this can be achieved is explored.

Originality/value

Evidence is provided to justify a shift toward seeking trust-building strategies by state authorities to engender voluntary compliance among the self-employed operating in the informal sector in Europe.

Details

Fulbright Review of Economics and Policy, vol. 1 no. 1
Type: Research Article
ISSN: 2635-0173

Keywords

Article
Publication date: 25 May 2021

Colin Williams and Gamze Oz-Yalaman

Until now, most scholars have used one of four competing theories to explain undeclared work. Political economy theories explain undeclared work as resulting from the…

Abstract

Purpose

Until now, most scholars have used one of four competing theories to explain undeclared work. Political economy theories explain undeclared work as resulting from the exclusion of workers from formal work and welfare, neo-liberal theories explain such work as a voluntarily chosen rational economic decision and neo-institutionalist and post-structuralist theories explain those engaging as social actors who disagree with the formal rules or seek to help others out respectively. Recognising that each theory focuses upon different employment relationships, this paper evaluates the proposition that these different theories are more explanations of different types of undeclared work.

Design/methodology/approach

To evaluate this, data reported is collected in 2019 across 28 European countries (the 27 member states of the European Union and the United Kingdom) in special Eurobarometer survey 92.1 involving 27,565 interviews.

Findings

Of the 3.6% of citizens participating in undeclared work, 10% engage in undeclared waged employment, 42% in undeclared self-employment and 48% in undeclared paid favours. Reporting their rationales, 7% state purely political economy exclusion-driven reasons, 19% solely neo-liberal rational economic actor reasons, 20% purely social actor reasons and 54% mixed motives. A logistic regression analysis finds those engaging in undeclared waged employment significantly more likely to state purely exclusion-driven rationales, those engaging in undeclared self-employment significantly more likely to state neo-liberal rational economic actor and neo-institutionalist social actor rationales and those engaging in undeclared paid favours post-structuralist social actor motives.

Practical implications

This finding suggests that the policy initiatives required to tackle undeclared work will vary according to the type of undeclared work addressed. These are outlined.

Originality/value

Evidence is provided that a different weighting needs to be given to different theories when explaining each type of undeclared work.

Details

Employee Relations: The International Journal, vol. 43 no. 6
Type: Research Article
ISSN: 0142-5455

Keywords

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