Explaining the Normality of Informal Employment in Ukraine: A Product of Exit or Exclusion?
American Journal of Economics and Sociology, Vol. 70, No. 3, pp. 729-755, 2011
27 Pages Posted: 14 Dec 2015
Date Written: 2011
This paper evaluates critically the competing explanations for the persistence and growth of informal employment in contemporary societies. These interpret the normality of informality either through a structuralist lens as arising out of “exclusion” from state benefits and the circuits of the modern economy or through a neo-liberal and/or post-structuralist lens as driven by the voluntary “exit” of workers out of formal institutions and into this alternative realm. To evaluate critically the validity of these competing explanations, this paper reports a 2005/6 survey of informal employment in post-socialist Ukraine. Analyzing the results of 600 face-to-face interviews, the finding is that either/or explanations need to be transcended. Informal employment is neither universally driven by exclusion nor exit. Instead, some participate mostly due to exclusion, others mostly for exit rationales and some for a combination of the two, with different mixtures across different populations and types of informal employment. The outcome is a call to move towards more context-bound understandings of the pervasiveness of informality through greater appreciation of the heterogeneity of this sphere and how both exit and exclusion are variously entwined in different settings.
Keywords: underground economy, undeclared work, shadow economy, tax compliance, Ukraine, post-socialism
JEL Classification: H26, J46, J48, K34, K42, O17
Suggested Citation: Suggested Citation