Evaluating the Participation of the Unemployed in Undeclared Work: Evidence from a 27-nation European survey

Abstract:

This paper evaluates critically the major competing perspectives regarding the participation of the unemployed in undeclared work. These are firstly, the ‘marginalisation’ perspective which holds that the unemployed disproportionately participate in and gain from undeclared work, and secondly, the ‘reinforcement’ perspective which holds that the unemployed benefit less from undeclared work than those in declared employment, meaning that undeclared work reinforces, rather than reduces, the inequalities produced by the declared realm.

Reporting the results of a 2007 Eurobarometer survey on undeclared work comprising 26,659 face-to-face interviews conducted in the 27 member states of the European Union, the finding is that the marginalisation perspective is applicable to Southern Europe and the reinforcement perspective to Nordic nations. However, in East-Central Europe and Western European nations, as well as the EU-27 as a whole, the marginalisation and reinforcement perspectives are not mutually exclusive but co-exist; the unemployed are more likely to participate in undeclared work but receive significantly lower earnings and gain less from undeclared work than those working undeclared who are in declared jobs.

The outcome is a call for a new ‘reinforced marginalisation’ perspective which holds that the unemployed disproportionately engage in undeclared work but their participation reinforces their marginalised position relative to the employed. The paper then seeks tentative explanations for these findings.