Beyond the Formal/Informal Jobs Divide: Evaluating the Prevalence of Hybrid ‘Under-Declared’ Employment in South-Eastern Europe
International Journal of Human Resource Management, Vol. 21, N. 14, pp. 2529-2546, 2010
Posted: 14 Dec 2015
Date Written: 2010
To evaluate critically the recurring assumption that a job is either formal or informal, but never simultaneously both, this paper uncovers how in South-Eastern Europe many formal employees receive not only a declared wage from their formal employer but also an additional undeclared (‘envelope’) wage. Reporting a 2007 EU-wide survey comprising 26,659 face-to-face interviews, some 1 in 6 (16 per cent) formal employees in South-East Europe are found to be in these hybrid ‘under-declared’ jobs receiving on average 60 per cent of their gross salary as an envelope wage. Uncovering how despite this employment arrangement being unevenly distributed across countries, employee groups and businesses, it is not confined to small pockets but is ubiquitous across the South-East European labour market and beyond, the paper then concludes by discussing the implications for both policy and theory of the existence of ‘under-declared’ formal employment.
Keywords: informal economy, undeclared work, underground sector, dual economy, envelope wages, tax non-compliance, South-Eastern Europe, European Union
JEL Classification: H26, J46, K42, O17
Suggested Citation: Suggested Citation