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Dropping the books and working off the books

Author

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  • Rita Cappariello

    () (Bank of Italy)

  • Roberta Zizza

    () (Bank of Italy)

Abstract

The paper empirically tests the relationship between underground labour and schooling achievement for Italy; a country ranking badly in both respects when compared to 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 Italys Survey on Household Income and Wealth. After controlling for a wide range of socio-demographic 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.

Suggested Citation

  • Rita Cappariello & Roberta Zizza, 2009. "Dropping the books and working off the books," Temi di discussione (Economic working papers) 702, Bank of Italy, Economic Research and International Relations Area.
  • Handle: RePEc:bdi:wptemi:td_702_09
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    References listed on IDEAS

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    1. Maloney, William F., 2004. "Informality Revisited," World Development, Elsevier, vol. 32(7), pages 1159-1178, July.
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    Citations

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    Cited by:

    1. Edoardo Di Porto & Leandro Elia, 2015. "Estimating Labor Demand Function in the Presence of Undeclared Labour: A Look Behind the Curtain," CSEF Working Papers 389, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    2. Gilbert Mbara & Ryszard Kokoszczynski & Joanna Tyrowicz, 2017. "Striking a balance: optimal tax policy with labor market duality," GRAPE Working Papers 16, GRAPE Group for Research in Applied Economics.
    3. 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.
    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. 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.
    6. Gaetano Lisi & Maurizio Pugno, 2015. "A matching model of endogenous growth and underground firms," International Journal of Economic Theory, The International Society for Economic Theory, vol. 11(4), pages 347-369, December.
    7. 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.
    8. Gaetano Lisi & Maurizio Pugno, 2010. "The Underground Economy in a Matching Model of Endogenous Growth," Working Papers 2010-07, Universita' di Cassino, Dipartimento di Scienze Economiche.
    9. Leandro Elia & Edoardo Di Porto, 2011. "Undeclared Work And Wage Inequality," Working Papers 201108, Università della Calabria, Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF.
    10. 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.

    More about this item

    Keywords

    irregular employment; underground economy; dual informal sector; occupational choice; education; school drop-out; North and South divide;

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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