Informal Workers Across Europe:Evidence from 30 Countries

The European Social Survey data are used to analyze informal employment at the main jobin 30 countries. Overall, informality decreases from South to West to East to North. However,dependent work without contract is more prevalent in Eastern Europe than in the West,except for Ireland, the UK and Austria. Between 2004 and 2009, no cases found whenunemployment and dependent informality rates in a country went up together, suggestingthat work without contract is pro-cyclical in Europe. Dependent informality rate is inverselyrelated to skills (measured by either schooling or occupation). The low-educated, the young(especially students), the elderly, and persons with disabilities are more likely to workinformally, other things equal. In Southern and Western Europe, immigrants from CEE andFSU feature the highest dependent informality rate, whilst in Eastern Europe this group issecond after minorities without immigrant background. In Eastern, Southern and part ofWestern Europe, immigrants not covered by EU free mobility provisions are more likely towork without contracts than otherwise similar natives. We provide evidence that exclusionand discrimination play important role in pushing employees into informality, whilst thisseems not to be the case for informal self-employed. Both on average and after controllingfor a rich set of individual characteristics, informal employees in all parts of Europe arehaving the largest financial difficulties among all categories of employed population (yet theyfare much better than the unemployed and discouraged), whilst informal self-employed are atleast as well off as formal employees....