Publication:
What Explains Prevalence of Informal Employment in European Countries : The Role of Labor Institutions, Governance, Immigrants, and Growth

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dc.contributor.authorHazans, Mihails
dc.date.accessioned2012-03-19T18:06:51Z
dc.date.available2012-03-19T18:06:51Z
dc.date.issued2011-12-01
dc.description.abstractThis paper looks into institutional and other macro determinants of prevalence of informal dependent employment, as well as informal self-employment, in European countries, using European Social Survey data on work without legal contract in on 30 countries, covering years 2004-2009. Consistently with theoretical predictions, quality of business environment has a significant negative impact on prevalence of both types of informal employment. The share of non-contracted employees is negatively affected by perceived quality of public services and positively related to economic growth. Informal self-employment is positively related to growth in Europe at large, as well as in Eastern and Southern Europe. The level of GDP per capita also has a positive impact on the prevalence of informal employment in Europe at large and within Eastern and Southern Europe, whilst an opposite effect is found in Western and Northern Europe. Other things equal, the share of non-contracted employees in the labor force across European countries increases with the minimum-to-average wage ratio, with union density, with the share of first and second generation immigrants, and with income inequality, but falls with stricter employment protection legislation (EPL) and higher tax wedge on labor. Thus it appears that in Europe at large, labor cost effects of EPL and taxes are weaker than their impact via perceptions of job security and law enforcement, along with tax morale and the income effect. Yet the EPL effect on informality is positive (i.e., cost-related) when either Eastern and Southern Europe or Western and Northern Europe are considered separately. Furthermore, within Western and Northern Europe, the minimum wage effect is negative, whilst within Eastern and Southern Europe, the union effect is negative; in both cases, we offer a supply side explanation.en
dc.identifierhttp://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20111214174555
dc.identifier.doi10.1596/1813-9450-5917
dc.identifier.urihttps://hdl.handle.net/10986/3687
dc.languageEnglish
dc.relation.ispartofseriesPolicy Research working paper ; no. WPS 5917
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectACCOUNTING
dc.subjectACTIVE LABOR
dc.subjectACTIVE LABOR MARKET
dc.subjectACTIVE LABOR MARKET POLICY
dc.subjectADVERSE IMPACT
dc.subjectASSESSING LABOR MARKET
dc.subjectAVERAGE UNEMPLOYMENT
dc.subjectAVERAGE WAGE
dc.subjectBANKRUPTCY
dc.subjectBARGAINING
dc.subjectBUSINESS CYCLE
dc.subjectCAPITAL STOCK
dc.subjectCHECKS
dc.subjectCOMPARATIVE ADVANTAGE
dc.subjectCOMPETITIVENESS
dc.subjectCONTRACT ENFORCEMENT
dc.subjectCREDIT CONSTRAINT
dc.subjectDEVELOPING COUNTRIES
dc.subjectDEVELOPMENT ECONOMICS
dc.subjectDEVELOPMENT POLICY
dc.subjectDISCOURAGED WORKERS
dc.subjectECONOMIC DEVELOPMENT
dc.subjectECONOMIC GROWTH
dc.subjectEMPLOYABILITY
dc.subjectEMPLOYEE
dc.subjectEMPLOYEE BENEFITS
dc.subjectEMPLOYMENT MODELS
dc.subjectEMPLOYMENT PROTECTION LEGISLATION
dc.subjectEMPLOYMENT RELATIONSHIP
dc.subjectEMPLOYMENT STATUS
dc.subjectENTRY BARRIER
dc.subjectEXPORTS
dc.subjectFAIR
dc.subjectFINANCIAL CAPITAL
dc.subjectFINANCIAL MARKET
dc.subjectFINANCIAL MARKETS
dc.subjectFISCAL BURDEN
dc.subjectFORMAL LABOR MARKET
dc.subjectGDP
dc.subjectGDP PER CAPITA
dc.subjectGOVERNMENT EXPENDITURES
dc.subjectGOVERNMENT SPENDING
dc.subjectHUMAN CAPITAL
dc.subjectHUMAN DEVELOPMENT
dc.subjectIMPLICIT TAX
dc.subjectINCOME
dc.subjectINCOME EFFECT
dc.subjectINCOME INEQUALITY
dc.subjectINCOME LEVEL
dc.subjectINFLATION
dc.subjectINFLATIONARY PRESSURE
dc.subjectINFORMAL ECONOMY
dc.subjectINFORMAL EMPLOYMENT
dc.subjectINFORMAL SECTOR
dc.subjectINNOVATION
dc.subjectINTERNATIONAL BANK
dc.subjectINVESTMENT CLIMATE
dc.subjectJOB CREATION
dc.subjectJOB DESTRUCTION
dc.subjectJOB SECURITY
dc.subjectJOBS
dc.subjectLABOR COST
dc.subjectLABOR COSTS
dc.subjectLABOR DEMAND
dc.subjectLABOR FORCE
dc.subjectLABOR FORCE PARTICIPATION
dc.subjectLABOR MARKET
dc.subjectLABOR MARKET DISCRIMINATION
dc.subjectLABOR MARKET FLEXIBILITY
dc.subjectLABOR MARKET IMPACT
dc.subjectLABOR MARKET INSTITUTIONS
dc.subjectLABOR MARKET PERFORMANCE
dc.subjectLABOR MARKET POLICY
dc.subjectLABOR MARKET REGULATIONS
dc.subjectLABOR SUPPLY
dc.subjectLEGAL ENVIRONMENT
dc.subjectLONG-TERM UNEMPLOYMENT
dc.subjectLOW TRUST
dc.subjectMARGINAL COST
dc.subjectMARGINAL COST OF PRODUCTION
dc.subjectMARGINAL PRODUCTS
dc.subjectMARKET WAGE
dc.subjectMINIMUM WAGE
dc.subjectMOTIVATION
dc.subjectPASSIVE LABOR
dc.subjectPENSION
dc.subjectPENSION SYSTEM
dc.subjectPRESENT VALUE
dc.subjectPRICE CONTROLS
dc.subjectPRICE STABILITY
dc.subjectPRODUCT MARKET
dc.subjectPRODUCT MARKET REGULATION
dc.subjectPRODUCT MARKET REGULATIONS
dc.subjectPRODUCT MARKETS
dc.subjectPRODUCTION FUNCTION
dc.subjectPRODUCTION OUTPUT
dc.subjectPROFIT MAXIMIZATION
dc.subjectPROPERTY RIGHTS
dc.subjectPUBLIC SERVICES
dc.subjectREAL GDP
dc.subjectREGULATORY FRAMEWORK
dc.subjectRETURNS
dc.subjectRIGID LABOR MARKET
dc.subjectRULE OF LAW
dc.subjectSCALE EFFECT
dc.subjectSCALE EFFECTS
dc.subjectSIDE EFFECTS
dc.subjectSUBSTITUTE
dc.subjectSUBSTITUTES
dc.subjectSUBSTITUTION
dc.subjectSUBSTITUTION EFFECT
dc.subjectSUBSTITUTION EFFECTS
dc.subjectTAX
dc.subjectTAX RATE
dc.subjectTAX RATES
dc.subjectTAXATION
dc.subjectTOTAL FACTOR PRODUCTIVITY
dc.subjectTRADE UNION
dc.subjectTRADE UNIONS
dc.subjectTRAINING COSTS
dc.subjectTRANSITION COUNTRIES
dc.subjectTURNOVER
dc.subjectUNEMPLOYED
dc.subjectUNEMPLOYED PERSON
dc.subjectUNEMPLOYMENT
dc.subjectUNEMPLOYMENT BENEFIT
dc.subjectUNEMPLOYMENT BENEFITS
dc.subjectUNEMPLOYMENT EXPERIENCE
dc.subjectUNEMPLOYMENT INSURANCE
dc.subjectUNEMPLOYMENT LEVEL
dc.subjectUNEMPLOYMENT RATE
dc.subjectUNION DENSITY
dc.subjectUTILITY FUNCTIONS
dc.subjectUTILITY MAXIMIZATION
dc.subjectWAGE EFFECT
dc.subjectWAGE EFFECTS
dc.subjectWAGE EMPLOYMENT
dc.subjectWAGE LEVEL
dc.subjectWAGE LEVELS
dc.subjectWAGE RATE
dc.subjectWAGES
dc.subjectWEALTH
dc.subjectWORKER
dc.subjectWORKING CONDITIONS
dc.titleWhat Explains Prevalence of Informal Employment in European Countries : The Role of Labor Institutions, Governance, Immigrants, and Growthen
dspace.entity.typePublication
okr.crosscuttingsolutionareaJobs
okr.crossref.titleWhat Explains Prevalence of Informal Employment in European Countries: The Role of Labor Institutions, Governance, Immigrants, and Growth
okr.date.doiregistration2025-04-10T11:05:11.154479Z
okr.doctypePublications & Research::Policy Research Working Paper
okr.docurlhttp://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20111214174555
okr.globalpracticeSocial Protection and Labor
okr.guid186571468023366551
okr.identifier.doi10.1596/1813-9450-5917
okr.identifier.externaldocumentum000158349_20111214174555
okr.identifier.internaldocumentum15552661
okr.identifier.reportWPS5917
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2011/12/14/000158349_20111214174555/Rendered/PDF/WPS5917.pdfen
okr.region.administrativeEurope and Central Asia
okr.topicSocial Protections and Labor::Labor Policies
okr.unitDevelopment Research Group (DECRG)
okr.volume1 of 1
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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