Search results

1 – 10 of 15
Click here to view access options
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

Open Access
Article
Publication date: 6 August 2018

Ioana Alexandra Horodnic

The purpose of this paper is to conduct a systematic review of the factors that shape tax morale. A large range of random explanatory variables identified in the…

Downloads
8942

Abstract

Purpose

The purpose of this paper is to conduct a systematic review of the factors that shape tax morale. A large range of random explanatory variables identified in the literature as determinants of tax morale are synthesised and structured by drawing inspiration from the institutional theory.

Design/methodology/approach

To do this, a systematic search has been conducted using a library catalogue which provides access to more than 400 databases.

Findings

The finding is that the institutional theory provides a suitable theoretical basis to explore tax morale. Indeed, all the factors until now identified as determinants of tax morale (except the control variables/socio-demographic characteristics) can be categorised either as belonging to formal institutions or to informal institutions. The most salient factor is trust, with both vertical and horizontal trust positively related to tax morale.

Research limitations/implications

The outcome is a call for a more nuanced understanding of not only the effect of formal and informal institutions on tax morale but also how formal and informal institutions interact and alter each other and, consequently, affect tax morale.

Practical implications

The paper seeks to encourage governments to start recognising that as low tax morale arises when a gap exists between formal and informal institutions, they need to design policy measures aimed to reduce this gap, rather than persisting with deterrence measures.

Originality/value

This is the first systematic review of the factors that influence tax morale using an institutionalist lens.

Details

International Journal of Sociology and Social Policy, vol. 38 no. 9/10
Type: Research Article
ISSN: 0144-333X

Keywords

Click here to view access options
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

Click here to view access options
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…

Downloads
2448

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

Click here to view access options
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

Click here to view access options
Article
Publication date: 11 April 2017

Jan Windebank and Ioana Alexandra Horodnic

France is a model of best practice in the European Union as regards policy to combat undeclared work. The purpose of this paper is to take the country as a case study to…

Abstract

Purpose

France is a model of best practice in the European Union as regards policy to combat undeclared work. The purpose of this paper is to take the country as a case study to evaluate the competing explanations of why people engage in undeclared work which underpin such policy, namely, the dominant rational-economic-actor approach and the more recent social-actor approach.

Design/methodology/approach

To evaluate these approaches, the results of 1,027 interviews undertaken in 2013 with a representative sample of the French population are analysed.

Findings

The finding is that higher perceived penalties and risks of detection have no significant impact on the likelihood of conducting undeclared work in France. In contrast, the level of tax morale has a significant impact on engagement in the activity: the higher the tax morale, the lower is the likelihood of participation in the undeclared economy. Higher penalties and risks of detection only decrease the likelihood of participation in undeclared work amongst the small minority of the French population with very low tax morale.

Practical implications

Current policy in France to counter undeclared work is informed principally by the rational-economic-actor approach based on a highly developed infrastructure for detection and significant penalties alongside incentives to declare small-scale own-account work. The present analysis suggests that this approach needs to be supplemented with measures to improve citizens’ commitment to compliance by enhancing tax morale.

Originality/value

This case study of a country with a well-developed policy framework to combat undeclared work provides evidence to support the social-actor approach for informing policy change.

Details

International Journal of Sociology and Social Policy, vol. 37 no. 3/4
Type: Research Article
ISSN: 0144-333X

Keywords

Click here to view access options
Article
Publication date: 11 December 2019

Ioana Alexandra Horodnic and Colin C. Williams

In recent years, there has been a concern that employers are falsely classifying employees as self-employed to evade collective agreements and labour laws (e.g. minimum…

Abstract

Purpose

In recent years, there has been a concern that employers are falsely classifying employees as self-employed to evade collective agreements and labour laws (e.g. minimum wages, working time legislation and protection in case of redundancy), and the result is that these dependent self-employed suffer poorer working conditions. The purpose of this paper is to provide an extensive evaluation of the working conditions of those in dependent self-employment compared with the genuine self-employed.

Design/methodology/approach

To do so, data are reported from a 2015 European Working Conditions Survey of 35,765 workers in 28 European Union member states.

Findings

Of the 4.3 per cent of the working population found to be in dependent self-employment, the finding is that they have similar working conditions to the genuine self-employed in terms of their physical and social environment and intensity of work. However, they have poorer job prospects and less ability to use their skills and discretion than the genuine self-employed. In terms of the working time quality, meanwhile, the finding is that they have better conditions than the genuine self-employed. Therefore, this analysis uncovers the need for a more nuanced understanding of the relative working conditions of the dependent self-employed.

Research limitations/implications

If the working conditions of the dependent self-employed are to be tackled, evaluation is now required of whether the current policy approaches, such as developing a hybrid category of employment with legal rights attached, address the specific working conditions that are worse for the dependent self-employed.

Originality/value

This is one of the few papers which provides an extensive evaluation of the working conditions of those in dependent self-employment in the EU28.

Details

International Journal of Entrepreneurial Behavior & Research, vol. 26 no. 2
Type: Research Article
ISSN: 1355-2554

Keywords

Click here to view access options
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

Click here to view access options
Article
Publication date: 8 August 2016

Colin C Williams and Ioana Alexandra Horodnic

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…

Downloads
1156

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.

Details

Journal of Economic Studies, vol. 43 no. 3
Type: Research Article
ISSN: 0144-3585

Keywords

Click here to view access options
Article
Publication date: 5 January 2015

Colin C Williams and Ioana Alexandra Horodnic

The purpose of this paper is to evaluate critically the “marginalisation” thesis, which holds that marginalised populations disproportionately participate in undeclared…

Abstract

Purpose

The purpose of this paper is to evaluate critically the “marginalisation” thesis, which holds that marginalised populations disproportionately participate in undeclared work. Until now, the evidence that participation in undeclared work is higher in marginalised areas (e.g. peripheral rural localities) and marginalised socio-economic groups (e.g. the unemployed, immigrant populations and women) has come from mostly small-scale surveys of particular localities and population groups. There have been no extensive quantitative surveys. Here, the intention is to fill this gap.

Design/methodology/approach

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

Findings

The finding is that the marginalisation thesis is valid when discussing younger people and those living in peripheral rural areas; they are more likely to participate in undeclared work. However, there is no significant association between immigrant populations and participation in undeclared work. Moreover, a reinforcement thesis, which holds that the undeclared economy reinforces the spatial and socio-economic disparities produced by the declared economy, applies when considering those with fewer years in education, women, the unemployed and less affluent European regions; they have lower participation rates than higher educated people, men, the employed and affluent European regions.

Research limitations/implications

The outcome is a call for a more nuanced understanding of the marginalisation thesis as valid for some marginalised populations but not others. Whether similar findings prevail at other spatial scales and in other global regions now needs investigating.

Practical implications

This survey displays that although it is appropriate to target some marginalised populations when tackling undeclared work, this is not valid for others (e.g. immigrant populations, the unemployed, those living in less affluent EU regions).

Originality/value

The first extensive evaluation of whether marginalised populations are more likely to participate in undeclared work.

Details

Employee Relations, vol. 37 no. 1
Type: Research Article
ISSN: 0142-5455

Keywords

1 – 10 of 15