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Explaining individual- and country-level variations in unregistered employment using a multi-level model: evidence from 35 Eurasian countries

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  • Krasniqi Besnik A.

    (Associate Professor of Entrepreneurship and Small Business, University of Prishtina «Hasan Prishtina»)

  • Williams Colin C.

    (Professor of Public Policy, Sheffield University Management School (SUMS), University of Sheffield)

Abstract

The aim of this paper is to evaluate the individual- and country-level variations in unregistered employment. To analyse whether it is marginalised groups who are more likely to engage in unregistered employment and explain the country-level variations, a 2010 Life in Transition Survey (LiTS) involving 38,864 interviews in 35 Eurasian countries is reported. Multilevel logistic regression analysis reveals that younger age groups, the divorced, and those with fewer years in education, are more likely to be unregistered employed. On a country-level, meanwhile, the prevalence of unregistered employment is strongly associated with tax morale; the greater the asymmetry between informal and formal institutions, the greater is the prevalence of unregistered employment. It is also higher when GDP per capita as well as social distribution and state intervention (subsidies and transfers, social contribution expenditure, health expenditure) are lower. The paper concludes by discussing the theoretical and policy implications.

Suggested Citation

  • Krasniqi Besnik A. & Williams Colin C., 2017. "Explaining individual- and country-level variations in unregistered employment using a multi-level model: evidence from 35 Eurasian countries," South East European Journal of Economics and Business, Sciendo, vol. 12(2), pages 61-72, December.
    • Handle: RePEc:vrs:seejeb:v:12:y:2017:i:2:p:61-72:n:5
    DOI: 10.1515/jeb-2017-0017
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    References listed on IDEAS

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    5. Williams Colin, 2012. "Cross-National Variations in the Under-Reporting of Wages in South-East Europe: A Result of Over-Regulation or Under-Regulation?," South East European Journal of Economics and Business, Sciendo, vol. 7(1), pages 53-61, April.
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    7. Olumide TAIWO, 2013. "Employment choice and mobility in multi-sector labour markets: Theoretical model and evidence from Ghana," International Labour Review, International Labour Organization, vol. 152(3-4), pages 469-492, December.
    8. Colin C. Williams, 2013. "Evaluating cross-national variations in the extent and nature of informal employment in the European Union," Industrial Relations Journal, Wiley Blackwell, vol. 44(5-6), pages 479-494, November.
    9. Colin C. Williams & Ioana Horodnic, 2015. "Marginalisation and participation in the informal economy in Central and Eastern European nations," Post-Communist Economies, Taylor & Francis Journals, vol. 27(2), pages 153-169, June.
    10. Schneider,Friedrich & Enste,Dominik H., 2016. "The Shadow Economy," Cambridge Books, Cambridge University Press, number 9781316600894.
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    12. Besnik A. Krasniqi & Muhamet Mustafa, 2016. "Small firm growth in a post-conflict environment: the role of human capital, institutional quality, and managerial capacities," International Entrepreneurship and Management Journal, Springer, vol. 12(4), pages 1165-1207, December.
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    14. Williams Colin C. & Franic Josip, 2015. "Tackling the Propensity towards Undeclared Work: Some Policy Lessons from Croatia," South East European Journal of Economics and Business, Sciendo, vol. 10(1), pages 18-31, April.
    15. Colin C. Williams & Ioana A. Horodnic, 2017. "Evaluating the Illegal Employer Practice of Under-Reporting Employees’ Salaries," British Journal of Industrial Relations, London School of Economics, vol. 55(1), pages 83-111, March.
    16. Ted London & Stuart L Hart, 2004. "Reinventing strategies for emerging markets: beyond the transnational model," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 35(5), pages 350-370, September.
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    18. Vartuhí Tonoyan & Robert Strohmeyer & Mohsin Habib & Manfred Perlitz, 2010. "Corruption and Entrepreneurship: How Formal and Informal Institutions Shape Small Firm Behavior in Transition and Mature Market Economies," Entrepreneurship Theory and Practice, , vol. 34(5), pages 803-832, September.
    19. Colin C. Williams & Besnik Krasniqi, 2017. "Evaluating the individual- and country-level variations in tax morale," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 44(5), pages 816-832, October.
    20. Colin C. Williams & Ioana A. Horodnic, 2017. "Evaluating the relationship between social exclusion and participation in the informal sector in the European Union," International Journal of Manpower, Emerald Group Publishing Limited, vol. 38(3), pages 489-503, June.
    21. Williams Colin C. & Franic Josip & Dzhekova Rositsa, 2015. "Explaining the Undeclared Economy in Bulgaria: an Institutional Asymmetry Perspective," South East European Journal of Economics and Business, Sciendo, vol. 9(2), pages 33-45, March.
    22. Lemieux, Thomas & Fortin, Bernard & Frechette, Pierre, 1994. "The Effect of Taxes on Labor Supply in the Underground Economy," American Economic Review, American Economic Association, vol. 84(1), pages 231-254, March.
    23. Colin C. Williams & Friedrich Schneider, 2016. "Measuring the Global Shadow Economy," Books, Edward Elgar Publishing, number 16551.
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    Citations

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    Cited by:

    1. C Williams, Colin, 2021. "Tackling Unregistered Employment In European Regions: Towards A Variegated Policy Approach," UTMS Journal of Economics, University of Tourism and Management, Skopje, Macedonia, vol. 12(2), pages 104-122.
    2. Maciej Berȩsewicz & Dagmara Nikulin, 2021. "Estimation of the size of informal employment based on administrative records with non‐ignorable selection mechanism," Journal of the Royal Statistical Society Series C, Royal Statistical Society, vol. 70(3), pages 667-690, June.
    3. Maciej Berk{e}sewicz & Dagmara Nikulin, 2019. "Estimation of the size of informal employment based on administrative records with non-ignorable selection mechanism," Papers 1906.10957, arXiv.org.
    4. Dagmara Nikulin & Ewa Lechman, 2021. "Shadow Economy in Poland: Results of the Survey," SpringerBriefs in Economics, in: Shadow Economy in Poland, chapter 0, pages 49-65, Springer.
    5. Gashi Ardiana & Williams Colin C., 2019. "Evaluating the Prevalence and Distribution of Unregistered Employment in Kosovo: Lessons from a 2017 Survey," South East European Journal of Economics and Business, Sciendo, vol. 14(1), pages 7-20, June.
    6. Williams Colin C. & Gashi Ardiana, 2022. "Formal Institutional Failings and Informal Employment: Evidence from the Western Balkans," South East European Journal of Economics and Business, Sciendo, vol. 17(2), pages 83-95, December.
    7. Williams Colin C. & Kayaoglu Aysegul, 2020. "The Coronavirus Pandemic and Europe’s Undeclared Economy: Impacts and a Policy Proposal," South East European Journal of Economics and Business, Sciendo, vol. 15(1), pages 80-92, June.
    8. C Williams, Colin, 2021. "Explaining And Tackling Undeclared Work In South East Europe: Lessons From A 2019 Eurobarometer Survey," UTMS Journal of Economics, University of Tourism and Management, Skopje, Macedonia, vol. 12(1), pages 1-18.

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    More about this item

    Keywords

    informal sector; tax morale; institutional theory; labour law; tax evasion; Europe;
    All these keywords.

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • J46 - Labor and Demographic Economics - - Particular Labor Markets - - - Informal Labor Market
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies

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