What is it about?

The aim of this paper is to propose a new way of explaining participation in the informal economy as resulting from the asymmetry between the codified laws and regulations of a society’s formal institutions (government morality) and the norms, values and beliefs of the population that constitute its informal institutions (societal morality). The proposition is that the greater the asymmetry between government morality and societal morality, the greater is the propensity to participate in the informal economy.

Featured Image

Why is it important?

The finding is a strong correlation between the degree of institutional asymmetry (measured by tax morale) and participation in the informal economy. The lower the tax morale, the greater is the propensity to participate in the informal economy. Using ordered logistic regression analysis, tax morale is not found to significantly vary by for example social class, employment status or wealth, but there are significant gender, age and spatial variations with men, younger age groups, rural areas and Scotland displaying significantly lower tax morale than women, older people, urban areas and London.

Perspectives

This paper provides a new way of explaining participation in the informal economy and reviews its consequences for understanding and tackling the informal economy in the UK.

Professor Colin C Williams
University of Sheffield

Read the Original

This page is a summary of: An institutional theory of the informal economy: some lessons from the United Kingdom, International Journal of Social Economics, July 2016, Emerald, DOI: 10.1108/ijse-12-2014-0256.
You can read the full text:

Read

Contributors

The following have contributed to this page