Evaluating the prevalence of the undeclared economy in Central and Eastern Europe: An institutional asymmetry perspective

Abstract:

This article examines the undeclared economy in general, and envelope wages more particularly, in 10 Central and East European countries, drawing on a 2013 Eurobarometer survey.

The explanatory approach focuses on the asymmetry between the codified laws and regulations of the formal institutions and the unwritten socially shared rules of informal institutions.

A strong association is revealed between the prevalence of envelope wage payments and the degree of asymmetry between formal and informal institutions at both the individual and country levels. We explore the implications for theorising and for tackling undeclared work practices.