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Opportunism, Institutions and Moral Costs: the Socio-Cultural Dimension of the Underground Economy in Croatia 1995-1999

Listed author(s):
  • Aleksandar Stulhofer

    (Faculty of Philosophy, Zagreb)

  • Ivan Rimac

    (Ivo Pilar Social Sciences Institute, Zagreb)

Registered author(s):

    Since the causes and dynamics of the unofficial economy are inseparable from the sociocultural dimension, the authors analyze the dynamics of opportunism and (dis)trust in institutions in Croatia during the last half of the nineties. The analyses carried out are based on work in which the first author provided a theoretical conceptualization of the socio-cultural dimension of the unofficial economy (Štulhofer, 1997). Measurement of the dynamics of opportunism and (dis)trust in institutions was carried out on data collected in the World Values Study – Croatia 1995 (N = 1170) and the European Values Study – Croatia 1999 (N = 1003). The results point out that in the observed period the level of opportunism decreased, with respect to both the intensity and to the distribution. Interestingly, there has been no change in the age structure of opportunism (the youngest age cohort is still the most opportunistic). Unlike opportunism, with which it is positively correlated, distrust in institutions has increased, particularly in the youngest age cohort. Considering the theoretical model, in which the level of opportunism reflects the moral costs related to participation in the underground economy, the decrease in the level of opportunism and economic growth in the post-war period suggest a moderate reduction in the underground economy in Croatia during the second half of the nineties.

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    Paper provided by Institute of Public Finance in its series Occasional paper series with number 14.

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    Length: 14 pages
    Date of creation: Apr 2002
    Publication status: published in the journal “Financijska teorija i praksa”, 26 (1), 2002., pp. 213-228,
    Handle: RePEc:ipf:occasi:14
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    1. Ivo Bicanic & Katarina Ott, 1997. "The Unofficial Economy in Croatia : Causes, Size and Consequences," Occasional paper series 03, Institute of Public Finance.
    2. Bruno Frey & Friedrich Schneider, 2000. "Informal and underground economy," Economics working papers 2000-04, Department of Economics, Johannes Kepler University Linz, Austria.
    3. Friedrich Schneider, 2000. "The Increase of the size of the shadow economy of 18 OECD countries: Some preliminary explanations," Economics working papers 2000-08, Department of Economics, Johannes Kepler University Linz, Austria.
    4. Johnson, Simon & Kaufmann, Daniel & Zoido-Lobaton, Pablo, 1998. "Regulatory Discretion and the Unofficial Economy," American Economic Review, American Economic Association, vol. 88(2), pages 387-392, May.
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