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Dropping the Books and Working Off the Books

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  • Rita Cappariello
  • Roberta Zizza

Abstract

The paper empirically tests the relationship between underground labour and schooling achievement for Italy, a country ranking badly in both respects when compared with other high-income economies, with a marked duality between North and South. In order to identify underground workers, we exploit the information on individuals' social security positions available from the Bank of Italy's Survey on Household Income and Wealth. After controlling for a wide range of sociodemographic and economic variables and addressing potential endogeneity and selection issues, we show that a low level of education sizeably and significantly increases the probability of working underground. Switching from completing compulsory school to graduating at college more than halves this probability for both men and women. The gain is slightly higher for individuals completing the compulsory track with respect to those having no formal education at all. The different probabilities found for self-employed and dependent workers support the view of a dual informal sector, in which necessity and desirability coexist. Copyright 2010 CEIS, Fondazione Giacomo Brodolini and Blackwell Publishing Ltd.

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Bibliographic Info

Article provided by CEIS in its journal LABOUR.

Volume (Year): 24 (2010)
Issue (Month): 2 (06)
Pages: 139-162

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Handle: RePEc:bla:labour:v:24:y:2010:i:2:p:139-162

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  1. Van de Ven, Wynand P. M. M. & Van Praag, Bernard M. S., 1981. "The demand for deductibles in private health insurance : A probit model with sample selection," Journal of Econometrics, Elsevier, vol. 17(2), pages 229-252, November.
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Cited by:
  1. Lisi, Gaetano & Pugno, Maurizio, 2011. "The Underground Economy in a Matching Model of Endogenous Growth," MPRA Paper 31312, University Library of Munich, Germany.
  2. Lisi, Gaetano, 2009. "Il lavoro irregolare in Italia: un'analisi panel regionale
    [Underground Employment in the Regions of Italy: A Panel Analysis]
    ," MPRA Paper 18525, University Library of Munich, Germany.
  3. Leibfritz, Willi, 2011. "Undeclared economic activity in central and eastern Europe -- how taxes contribute and how countries respond to the problem," Policy Research Working Paper Series 5923, The World Bank.
  4. Gaetano Lisi, 2010. "The Strange Case of Dr. “Unemployed” and Mr “Hidden” in Italy," Economics Bulletin, AccessEcon, vol. 30(4), pages 2802-2816.
  5. Lisi, Gaetano, 2010. "Occupazione irregolare e disoccupazione in Italia: un’analisi panel regionale
    [Underground Employment and Unemployment in Italy: A Panel Analysis]
    ," MPRA Paper 22508, University Library of Munich, Germany.
  6. Amanda Carmignani & Francesco Bripi & Raffaela Giordano, 2011. "The quality of public services in Italy," Questioni di Economia e Finanza (Occasional Papers) 84, Bank of Italy, Economic Research and International Relations Area.
  7. Leandro Elia & Edoardo Di Porto, 2011. "Undeclared Work And Wage Inequality," Working Papers 201108, Università della Calabria, Dipartimento di Economia, Statistica e Finanza (Ex Dipartimento di Economia e Statistica).

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