IDEAS home Printed from https://ideas.repec.org/a/ris/utmsje/0181.html
   My bibliography  Save this article

Tackling The Informal Economy In The European Union: A Social Actor Approach

Author

Listed:
  • C. Williams, Colin

    () (Sheffield University Management School (SUMS), University of Sheffield, Sheffield, U.K)

  • Kayaoglu, Aysegul

    (Department of Economics, Istanbul Technical University, Istanbul, Turkey)

Abstract

In recent years, participants in the informal economy have started to be viewed less as rational economic actors who engage in the informal economy when the pay-off is greater than the expected cost of being caught and punished, and more as social actors who engage when their tax morale (i.e., motivation to pay taxes) is low. To evaluate this new social actor approach and the implications for tackling the informal economy, this paper reports evidence from 41,689 face-to-face interviews conducted across the European Union. Multilevel logistic regression analysis reveals a strong association between participation in the informal economy and the level of tax morale. Finding that higher tax morale (and thus lower participation in the informal economy) is strongly correlated at the country-level with greater levels of state intervention and at the individual-level with characteristics such as gender, age, education and employment status, the outcome is to confirm a structuralist political economy explanation and refute the modernization and neo-liberal explanations and remedies, as well as to uncover the importance of some policy solutions not considered until now, including older citizens mentoring of younger people, and improving women’s participation in the labour force.

Suggested Citation

  • C. Williams, Colin & Kayaoglu, Aysegul, 2016. "Tackling The Informal Economy In The European Union: A Social Actor Approach," UTMS Journal of Economics, University of Tourism and Management, Skopje, Macedonia, vol. 7(2), pages 133-147.
  • Handle: RePEc:ris:utmsje:0181
    as

    Download full text from publisher

    File URL: http://utmsjoe.mk/files/Vol.%207%20No.%202/UTMSJOE-2016-0702-01-Villiams-Kayaoglu.pdf
    File Function: Full text
    Download Restriction: no

    References listed on IDEAS

    as
    1. James Alm & Erich Kirchler & Stephan Muehlbacher & Katharina Gangl & Eva Hofmann & Christoph Kogler & Maria Pollai, 2012. "Rethinking the Research Paradigms for Analysing Tax Compliance Behaviour," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 13(2), pages 33-40, July.
    2. Cummings, Ronald G. & Martinez-Vazquez, Jorge & McKee, Michael & Torgler, Benno, 2009. "Tax morale affects tax compliance: Evidence from surveys and an artefactual field experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 70(3), pages 447-457, June.
    3. 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.
    4. Alm, James & Torgler, Benno, 2006. "Culture differences and tax morale in the United States and in Europe," Journal of Economic Psychology, Elsevier, vol. 27(2), pages 224-246, April.
    5. Christian Daude & Hamlet Gutierrez & Ángel Melguizo, 2013. "What Drives Tax Morale? A Focus on Emerging Economies," Hacienda Pública Española, IEF, vol. 207(4), pages 9-40, December.
    6. 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.
    7. Kirchler,Erich, 2007. "The Economic Psychology of Tax Behaviour," Cambridge Books, Cambridge University Press, number 9780521876742, October.
    8. Allingham, Michael G. & Sandmo, Agnar, 1972. "Income tax evasion: a theoretical analysis," Journal of Public Economics, Elsevier, vol. 1(3-4), pages 323-338, November.
    9. Erkko Autio & Kun Fu, 2015. "Economic and political institutions and entry into formal and informal entrepreneurship," Asia Pacific Journal of Management, Springer, vol. 32(1), pages 67-94, March.
    10. Kastlunger, Barbara & Lozza, Edoardo & Kirchler, Erich & Schabmann, Alfred, 2013. "Powerful authorities and trusting citizens: The Slippery Slope Framework and tax compliance in Italy," Journal of Economic Psychology, Elsevier, vol. 34(C), pages 36-45.
    11. Lago-Peñas, Ignacio & Lago-Peñas, Santiago, 2010. "The determinants of tax morale in comparative perspective: Evidence from European countries," European Journal of Political Economy, Elsevier, vol. 26(4), pages 441-453, December.
    12. Juin-jen Chang & Ching-chong Lai, 2004. "Collaborative tax evasion and social norms: why deterrence does not work," Oxford Economic Papers, Oxford University Press, vol. 56(2), pages 344-368, April.
    13. Murphy, Kristina, 2008. "Enforcing Tax Compliance: To Punish or Persuade?," Economic Analysis and Policy, Elsevier, vol. 38(1), pages 113-135, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:ris:utmsje:0206 is not listed on IDEAS

    More about this item

    Keywords

    informal economy; tax morale; modernization; political economy; European Union;

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • J46 - Labor and Demographic Economics - - Particular Labor Markets - - - Informal Labor Market
    • 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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ris:utmsje:0181. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Prof. Zoran Ivanovic, PhD). General contact details of provider: http://edirc.repec.org/data/feutmmk.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.