European Spatial Research and Policy


The aim of this article is to evaluate the competing theories that variously explain the greater prevalence of undeclared employment in some countries either as: a legacy of under-development; a result of the voluntary exit from declared employment due to the high taxes, state corruption and burdensome regulations and controls, or a product of a lack of state intervention in work and welfare which leads to the exclusion of workers from the declared economy and state welfare provision. Analyzing the cross-national variations in the prevalence of, and reasons for, undeclared employment across the European Union using evidence from a 2007 Eurobarometer survey, the finding is that undeclared employment is less prevalent and more of the voluntary variety in wealthier, less corrupt and more equal societies possessing higher levels of social protection and redistribution via social transfers. The theoretical and policy implications are then discussed.


informal sector, undeclared work, shadow economy, neo-liberalism, European Union




Ahmad, A. N. (2008), ‘Dead Men Working: Time and Space in London’s (‘Illegal’) Migrant Economy’, Work, Employment and Society, 22, pp. 301-318.

AMIN, A., CAMERON, A. and HUDSON, R. (2002), Placing the Social Economy, London: Routledge.

Becker , K. F. (2004), The Informal Economy, Stockholm: Swedish International Development Agency.

Buehn, A. and Schneider, F. (2012), ‘Shadow Economies around the World: Novel Insights, Accepted Knowledge and New Estimates’, International Tax and Public Finance, 19, pp. 139-171.

Castells, M. and Portes , A. (1989), World Underneath: The Origins, Dynamics and Effects of the Informal Economy, [in:] Portes , A., Castells, M. and Benton , L. (eds.), The Informal Economy: Studies in Advanced and Less Developing Countries, Baltimore: John Hopkins University Press, pp. 19-41.

Davis , M. (2006), Planet of Slums, London: Verso.

De Soto , H. (2001), The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else, London: Black Swan.

De Soto , H. (1989), The Other Path, London: Harper and Row.

Dekker , H., Oranje, E., Renooy, P., Rosing, F. and Williams, C. C. (2010), Joining up the Fight against Undeclared Work in the European Union, Brussels: DG Employment, Social Affairs and Equal Opportunities.

Dibben, P. and Williams, C. C. (2012), ‘Varieties of Capitalism and Employment Relations: Informally Dominated Market Economies’, Industrial Relations: A Review of Economy and Society, 51, pp. 563-582.

EUROPEAN COMMISSION (1998), Communication of the Commission on Undeclared Work, (9.07.2013).

EUROPEAN COMMISSION (2007a), Special Eurobarometer 284: Undeclared Work in the European Union, Brussels.

EUROPEAN COMMISSION (2007b), Stepping up the Fight against Undeclared Work, COM(2007) 628 final, Brussels.

EUROPEAN COMMISSION (2011), Employment and Social Developments in Europe 2011, Brussels.

EUROPEAN COMMISSION (2012a), Towards a Job-rich Recovery, COM(2012) 173 final, Brussels.

EUROPEAN COMMISSION (2012b), 2013-2014 Work Programme, COM(2012) 629 final, Brussels.

EUROPEAN PARLIAMENT (2008), Resolution on Stepping up the Fight against Undeclared Work, (9.07.2013).

EUROSTAT (2007), Taxation Trends in the European Union: Data for the EU Member States and Norway, Brussels.

EUROSTAT (2010), Taxation Trends in the European Union: Main Results, Brussels.

EUROSTAT (2013a), GDP per capita in PPS. (9.07.2013).

EUROSTAT (2013b), At Risk of Poverty Rate by Sex, (9.07.2013).

EUROSTAT (2013c), Inequality of Income Distribution, (9.07.2013).

Feld, L. and Schneider, F. (2010), ‘Survey on the Shadow Economy and Undeclared Earnings in OECD Countries’, German Economic Review, 11, pp. 109-149.

Feld, L. P. and Larsen, C. (2012), Undeclared Work, Deterrence and Social Norms: The Case of Germany, Berlin: Springer Verlag.

Fernandez-Kelly, P. (2006), ‘Introduction’, [in:] Fernandez-Kelly, P. and Shefner, J. (eds.), Out of the Shadows: Political Action and the Informal Economy in Latin America, Pennsylvania: Pennsylvania State University Press, pp. 1-18.

Gallin, D. (2001), ‘Propositions on Trade Unions and Informal Employment in Time of Globalisation’, Antipode, 19 (4), pp. 531-549.

Geertz, C. (1963), Old Societies and New States: The Quest for Modernity in Asia and Africa, Glencoe: Free Press.

GHK and Fondazione Brodolini (2009), Study on Indirect Measurement Methods for Undeclared Work in the EU, Brussels: European Commission.

Hudson, R. (2005), Economic Geographies: Circuits, Flows and Spaces, London: Sage.

ICRG (2013), International Country Risk Guide (ICRG), (7.04.2013).

ILO (2002), Women and Men in the Informal Economy: A Statistical Picture, Geneva: International Labour Office.

ILO (2011), Statistical Update on Employment in the Informal Economy, Geneva: ILO Department of Statistics.

Jütting, J. P. and Laiglesia , J. R. (2009), ‘Employment, Poverty Reduction and Development: What’s New?’, [in:] Jütting, J. P. and Laiglesia, J. R. (eds.), Is Informal Normal? Towards More and Better Jobs in Developing Countries, Paris: OECD, pp. 17-26.

Karpuskiene , V. (2007), ‘Undeclared Work, Tax Evasion and Avoidance in Lithuania’, Paper presented at colloquium of the Belgian Federal Service for Social Security on Undeclared Work, Tax Evasion and Avoidance, Brussels, June.

Lewis, A. (1959), The Theory of Economic Growth, London: Allen and Unwin.

London, T. and Hart , S. L. (2004), ‘Reinventing Strategies for Emerging Markets: Beyond the Transnational Model’, Journal of International Business Studies, 35, pp. 350-370.

Meagher, K. (2010), Identity Economics: social networks and the informal economy in Nigeria, James Currey, New York.

Mehrotra , S. and Biggeri , M. (eds.), (2007), Asian Informal Workers: Global Risks, Local Protection, London: Routledge.

Meriküll , J. and Staehr , K. (2010), ‘Unreported Employment and Envelope Wages in Midtransition: Comparing Developments and Causes in the Baltic Countries’, Comparative Economic Studies, 52, pp. 637-670.

Neef, R. (2002), ‘Aspects of the Informal Economy in a Transforming Country: The Case of Romania’, International Journal of Urban and Regional Research, 26, pp. 299-322.

Nwabuzor, A. (2005), ‘Corruption and Development: New Initiatives in Economic Openness and Strengthened Rule of Law’, Journal of Business Ethics, 59, pp. 121-138.

OECD (2002), Measuring the Non-observed Economy, Paris.

OECD (2012), Reducing Opportunities for Tax Non-compliance in the Underground Economy, Paris.

Pfau-Effinger, B. (2009), ‘Varieties of Undeclared Work in European Societies’, British Journal of Industrial Relations, 41, pp. 79-99.

Renooy, P., Ivarsson , S., van der Wusten-Gritsai, O. and Meijer, R. (2004), Undeclared Work in an Enlarged Union: An Analysis of Shadow Work - an In-depth Study of Specific Items, Brussels: European Commission.

Rodgers, P. and Williams, C. C. (2009), ‘The Informal Economy in the Former Soviet Union and in Central and Eastern Europe’, International Journal of Sociology, 39, pp. 3-11.

Sassen, S. (1996), Service Employment Regimes and the New Inequality, [in:] Mingione, E. (ed.), Urban Poverty and the Underclass, Oxford: Basil Blackwell, pp. 142-59.

Sauvy, A. (1984), Le Travail Noir et l’Economie de Demain, Paris: Calmann-Levy.

Schneider, F. (ed.), (2008), The Hidden Economy, Cheltenham: Edward Elgar.

Schneider, F. (ed.), (2011), Handbook on the Shadow Economy, Cheltenham: Edward Elgar.

Schneider , F., Buehn , A. and Montenegro , A. (2010), ‘New Estimates for the Shadow Economies all Over the World’, International Economic Journal, 24, pp. 443-461.

Sedlenieks , K. (2003), Cash in an Envelope: Corruption and Tax Avoidance as an Economic strategy in Contemporary Riga, [in:] Arnstberg, K-O. and Boren, T. (eds.), Everyday Economy in Russia, Poland and Latvia, Stockholm: Almqvist and Wiksell, pp. 35-51.

Sepulveda , L. and Syrett, S. (2007), ‘Out of the Shadows? Formalisation Approaches to Informal Economic Activity’, Policy and Politics, 35, pp. 87-104.

Slavnic , Z. (2010), ‘Political Economy of Informalization’, European Societies, 12, pp. 3-23.

SMALL BUSINESS COUNCIL (2004), Small Business in the Informal Economy: Making the Transition to the Formal Economy, London.

TNS Infratest, Rockwool Foundation and Regioplan (2006), Feasibility Study on a Direct Survey about Undeclared Work VC/2005/0276, Brussels: European Commission.

TRANSPARENCY INTERNATIONAL (2013), 2007 Corruption Perceptions Index (CPI), http:// (12.03.2013).

White, R. (2009), ‘Explaining Why the Non-commodified Sphere of Mutual Aid Is so Pervasive in the Advanced Economies: Some Case Study Evidence from an English City’, International Journal of Sociology and Social Policy, 29, pp. 457-472.

Williams, C. C. (2007), ‘Tackling Undeclared Work in Europe: Lessons from a Study of Ukraine’, European Journal of Industrial Relations, 13, pp. 219-237.

Williams, C. C. (2009), ‘Evaluating the Extent and Nature of Envelope Wages in the European Union: A Geographical Analysis’, European Spatial Research and Policy, 16, pp. 115-29.

Williams, C. C. (2010), ‘Beyond the Formal/Informal Jobs Divide: Evaluating the Prevalence of Hybrid “Under-declared” Employment in South-Eastern Europe’, International Journal of Human Resource Management, 21, pp. 2529-2546.

Williams, C. C. and PADMORE, J. (2013), ‘Evaluating the Prevalence and Distribution of Quasi- formal Employment in Europe’, Relations Industrielles/Industrial Relations, 68, pp. 71-95.

Williams, C. C. and Renooy, P. (2013), Tackling Undeclared Work in 27 European Union Member States and Norway: Approaches and Measures since 2008, Dublin: Eurofound.

Williams, C. C. and Windebank , J. (1995), ‘The Implications for the Informal Sector of European Union Integration’, European Spatial Research and Policy, 2, pp. 17-34.

Williams, C. C., Nadin, S. and Windebank , J. (2012), ‘Evaluating the Prevalence and Nature of Self-employment in the Informal Economy: Evidence from a 27-Nation European Survey’, European Spatial Research and Policy, 19 (1), pp. 129-142.

Woolfson, C. (2007), ‘Pushing the Envelope: The “Informalization” of Labor in Post-communist New EU Member States’, Work, Employment and Society, 21, pp. 551-564.

First Page


Last Page