What is it about?

To show how formal and informal jobs are not always discrete, this paper uncovers how many formal employees in the European Union are paid two wages by their formal employers, an official declared salary and an additional undeclared wage, thus allowing employers to evade their full social insurance and tax liabilities.

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Why is it important?

Analyzing a 2007 Eurobarometer survey involving 26,659 face-to-face interviews in the 27 member states of the European Union (EU-27), one in 18 formal employees are found to engage in such quasi-formal employment, receiving on average one-quarter of their gross salary on an undeclared basis. Multi-level logistic regression analysis reveals that quasi-formal employment is significantly more prevalent in East-Central Europe, in smaller businesses and the construction sector, and amongst men, younger persons and the lower paid. The paper then briefly reviews what might be done to tackle this illegitimate wage practice.

Perspectives

One of the first studies to enumerate the prevalence of under-declared employment in the European Union

Professor Colin C Williams
University of Sheffield

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This page is a summary of: Evaluating the Prevalence and Distribution of Quasi-formal Employment in Europe, Relations industrielles, January 2013, Consortium Erudit, DOI: 10.7202/1014742ar.
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