This paper examines how trade sanctions affect the allocation of workers across formal and informal employment. We analyse the case of the unexpected and unprecedented trade sanctions imposed on Iran in 2012. We use a difference-in-differences approach and compare the probability of working in...

Negotiations are a valuable and important tool for increasing the voice of workers in the informal economy. This paper provides empirical evidence from Africa, Asia and the Americas on negotiations and collective bargaining by workers in the informal economy. These practices demonstrate that...

In developing and transition economies as much as half the labor force works in the informal sector (or "shadow economy"). Informal firms congest infrastructure and other public services but do not contribute the taxes needed to finance them. Informal workers are unprotected against such...

Low- and middle-income countries face a trade-off between raising tax revenue to strengthen social protection and creating incentives for the population to enter formal employment. However, empirical evidence on labour supply elasticities in the presence of informal employment remains scarce....

Very few labor-based pathways for regular migration are available for people in Northern Central America, often called the 'Northern Triangle' of Guatemala, Honduras, and El Salvador. This note briefly summarizes the state of labor-based migration channels in the region. It then argues that...

Little is known about the size and determinants of undeclared work. While approaches to measure the shadow economy have been extensively discussed, conventional surveys dominate research on undeclared work. We review and extend this literature by first referring to the most recent survey data on...

Little is known about the size and determinants of undeclared work. While approaches to measure the shadow economy have been extensively discussed, conventional surveys dominate research on undeclared work. We review and extend this literature by first referring to the most recent survey data on...

This paper studies labour market tax avoidance in the 2010s in Hungary, following major labour market tax reforms in the beginning of the decade. First we show that aggregate time series are broadly consistent with a "whitening" process, in which a higher fraction of incomes are declared....

"Social Contracts and Informal Workers in the Global South draws on the accounts of informal workers, who represent over 60 per cent of the global workforce, to advocate for radically new conceptualizations of state-society, capital-labour and state-capital-labour relations, illustrating how...

This chapter investigates the impact of the imposition of sanctions for employing illegal migrants on the welfare of native laborers. In response to such sanctions, managers in a firm may be reassigned from the supervision of production to the verification of the legality of the firm’s labor...

Purpose: This paper tries to identify the wage gap between informal and formal workers and tests for the two-tier structure of the informal labour market in Poland. Design/methodology/approach: I employ the propensity score matching (PSM) technique and use data from the Polish Labour Force...

This discussion paper investigates the impact of the imposition of sanctions for employing illegal migrants on the welfare of native laborers. In response to such sanctions, managers in a firm may be reassigned from the supervision of production to the verification of the legality of the firm's...

This chapter investigates the impact of the imposition of sanctions for employing illegal migrants on the welfare of native laborers. In response to such sanctions, managers in a firm may be reassigned from the supervision of production to the verification of the legality of the firm's labor...

The aim of this paper is to evaluate two contrasting ways of explaining and tackling undeclared work. The rational economic actor approach theorizes undeclared work as arising when the benefits of undertaking undeclared work outweigh the costs, and the policy focus is upon deterring undeclared...

While there is general agreement that regulatory avoidance is an important part of firms' decisions to produce in the informal sector, there is much less agreement on how regulation and enforcement affect firms' decisions on, inter alia, which sector they locate in, their employment decisions,...

A pooled sample of 3,290 Algerian workers from two regional household surveys captures the determinants of access to the formal vs. informal labour market segments. Youth, female gender and low educational attainment drive informal employment. Segmentation does not preclude occupational...

Using a special module of the 2015 Mexican Labour Force Survey with information on workers' preferences for jobs with social security coverage, I estimate that 80 per cent of informal workers in large urban areas would prefer to work in a job that provides them with such coverage. The estimation...

In transition economies, a significant number of companies reduce their tax and social contributions by paying their staff an official salary, described in a registered formal employment agreement, and an extra, undeclared "envelope wage," via a verbal unwritten agreement. The consequences...

High tax rates have led to shadow economy worth over £150 billion in UKSummary:Measurement of the shadow economy is notoriously difficult as it requires estimation of economic activity that is deliberately hidden from official transactions. Surveys typically understate the size of the shadow...

The current focus of state authorities is still heavily upon “deterring” undeclared work using measures that improve the probability of detection and the penalties imposed on those caught. However, this only deals with undeclared work once it has occurred. It is also important to prevent...

At the Plenary meeting on 25 October 2019, the Platform decided to set up a working group on 'Holistic approaches to tackling undeclared work and developing national strategies'.The specific focus for this working group – as per activity 5 of the Platform's work programme 2019-2020 – is as...

The objectives of this report are: to review the elements of an effective education and awareness raising campaign on undeclared work; to set out a proposal for an education and awareness raising campaign on undeclared work in the Western Balkans, and to provide good practice examples of...

Research on informal employment in transition countries has been very limited because of a lack of appropriate data. A new rich panel data set from Ukraine, the Ukrainian Longitudinal Monitoring Survey (ULMS), enables us to provide some empirical evidence on informal employment in Ukraine and...

On 19th April 2021, the Western Balkan Network Tackling Undeclared Work held an online seminar that brought together representatives from enforcement authorities and social partners. The intention was to discuss and share understanding of the major challenges they face in pursuing greater...

This toolkit firstly evaluates the current involvement of Western Balkan social partners in tackling undeclared work and secondly, provides inspiration for social partners by reporting numerous policy initiatives being used by social partners to tackle undeclared work across the Western Balkans,...

Many economies tackle undeclared work by increasing the real or expected costs of participation in undeclared work. This can be achieved by increasing the perceived and/or actual sanctions imposed on those caught or by increasing the real and/or expected risk of detection. This report focuses...

Purpose: This paper tries to identify the wage gap between informal and formal workers and tests for the two-tier structure of the informal labour market in Poland.Design/methodology/approach: I employ the propensity score matching (PSM) technique and use data from the Polish Labour Force Survey...

Collecting, sharing and analysing data can improve enforcement authority performance not only in detecting undeclared work but also preventing non-compliance. The aim of this toolkit is to support enforcement authorities in the Western Balkans to improve their knowledge and awareness of how to...

Although enforcement authorities play a key role in tackling undeclared work, social partners also have an interest in preventing undeclared work. Employer federations wish to tackle the unfair competition that results from other businesses operating in the undeclared economy and trade unions...

We analyze the determinants of household work contracted in the German shadow economy. The German socio-economic household panel, which enumerates casual domestic employment, is used to estimate the demand for such household work. The regressors include regional wage rates, household income and...

Using a special module of the 2015 Mexican Labour Force Survey with information on workers' preferences for jobs with social security coverage, I estimate that 80 per cent of informal workers in large urban areas would prefer to work in a job that provides them with such coverage. A discrete...