What is it about?

The aim of this paper is to evaluate how employers who illegally under-report their employees’ salaries to evade paying the full tax and social contributions owed can be explained and tackled. These employers have been conventionally explained as rational economic actors doing so when the benefits outweigh the costs, and thus the solution is to increase the sanctions and/or probability of detection. An alternative social actor approach, however, explains employers as under-reporting salaries because of their lack of both vertical trust (i.e., their beliefs are not in symmetry with the laws and regulations) and horizontal trust (i.e., they believe many others are non-compliant).

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Why is it important?

Reporting a 2015 survey of 450 employers in FYR Macedonia, the finding is that there is no strong association between employers under-reporting salaries and their perceived level of penalties and risks of detection, but a strong significant association with both their level of vertical and horizontal trust.


Improving the trust of employers in each other and the trust of employers in state institutions is essential if under-declared employment is to be tackled.

Professor Colin C Williams
University of Sheffield

Read the Original

This page is a summary of: Explaining and Tackling Under-Declared Employment in FYR Macedonia: The Employers Perspective, South East European Journal of Economics and Business, December 2018, De Gruyter, DOI: 10.2478/jeb-2018-0010.
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