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UNDER.GO

“Going underground”:

Motivation of youth to work informally

 A research project supported by a grant of the Ministry of Research, Innovation and Digitization, CNCS/CCCDI – UEFISCDI, project number PN-III-P1-1.1-PD-2016-0415, within PNCDI III

About

With 17.9% of the EU28 GDP and some quarter of national income in the post-communist economies of East-Central Europe not declared to the authorities for tax purposes, tackling this phenomenon has become a core issue on the policy agendas of supra-national agencies and governments. Reviewing the literature, it becomes quickly apparent that in transition economies, envelope wages practice is the most proeminent part of the undeclared economy. Surprisingly, whilst for other forms of informal economy the motives have been investigated and theorized (e.g., exit and exclusion motives of undeclared work suppliers; lower price, formal market failure and redistributive motives for purchasing goods and/or services in the informal economy), this is not the case for envelope wages practice. This project aims to advance knowledge, by starting to fill the existent gap in literature regarding the motives lying behind envelope wage practice. The main research questions are: Is envelope wage a practice driven mostly by intrinsic motives or by extrinsic motives? Are there differences in respect of the level of institutional asymmetry? Considering that it was shown that students are more likely to involve in undeclared economy and that youth prefer more atypical forms of job and therefore, it is highly likely that they will accept envelope wages, the analysed youth population within the project will be represented by students. The study is designed to ensure a representative sample by both size and structure. Thus, this project will greatly increase our understanding of the undeclared economy and will provide policy relevant findings.

Research Team

Principal Investigator

Associate Prof. Ioana Alexandra Horodnic

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Mentor

Prof. Colin C. Williams

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Host Organization

Faculty of Economics and Business Administration

"Alexandru Ioan Cuza" University of Iasi

Objectives

Objective 1

To evaluate to what extent the intrinsic and the extrinsic motives explain the likelihood of accepting envelope wages by youth.

 

Objective 2

To analyse the interaction effect between the youth’ motives and their level of institutional asymmetry in explaining the likelihood of accepting envelope wages.

Results

Summary of the results (text): [English: Download] [Romanian: Download

 

Articles​:

  • Horodnic, I.A., Williams, C.C., Ianole-Călin, R. (2020). Does higher cash-in-hand income motivate young people to engage in under-declared employment? Eastern Journal of European Studies, Vol. 11, Issue 2 (December), pp.48-69. [Download]

  • Ianole-Călin R., Horodnic, I.A., Plopeanu, A.P. (2022, first online). Intrinsic versus Extrinsic Drivers: An Investigation into Young People’s Motives to Engage in Under-Declared Employment and Undeclared Work. Eastern European Economics, https://doi.org/10.1080/00128775.2022.2075393 [Download]

  • Horodnic, I.A., Williams, C.C., Ianole-Călin, R., Horodnic, A.V. (2022, accepted). Exploring the illegal practice of under-reporting wages in the construction industry: some lessons from Romania. Applied Economics, doi: 10.1080/00036846.2022.2107990.

  • Ianole-Călin R., Horodnic, I.A., Williams, C.C. (2022, under review). Explaining and tackling the different components of under-declared waged employment in Europe. Ekonomska Istrazivanja-Economic Research.

Policy Brief:

  • Horodnic, I.A., Williams, C.C. (2020). Tackling envelope wages in the student population / Măsuri de reducere a “plății în plic” în rândul studenÈ›ilor. UNDER.GO Policy Brief. [Download]

Research Mobilities:

  • Sheffield University - Management School / Cluster for Research on the Informal Sector and Policy - CRISP [September - October 2019; UK]

  • The University of Bucharest - The Faculty of Business and Administration / Research Center in Applied Behavioral Economics [July - August 2020; Romania]

  • Stefan cel Mare University of Suceava - Faculty of Economics, Administration and Business [July 2022; Romania]

  • The University of Bucharest - The Faculty of Business and Administration [May - June 2022; Romania]

Conferences/Seminars/Round tables:

  • Campaign Coordination Seminar (European Platform Tackling Undeclared Work), 10 December 2019, Crowne Plaza le Palace, Brussels​ [invited, onsite]

  • Round Table: Undeclared work among young people (Masa Rotundă: Munca nedeclarată în rândul tinerilor), 22 January 2020, The University of Bucharest, Faculty of Business and Administration, Bucharest [invited speaker; presentation: Motivations vs. theories for tackling undeclared work (Motivatii vs. teorii pentru combaterea muncii nedeclarate); onsite]

  • Tackling Undeclared Work In the Construction Sector (TUWIC), Tackling undeclared work in the construction sector in Romania (Combaterea muncii nedeclarate în sectorul de construcÈ›ii din România), EFBWW (European Federation of Building and Woodworkers) and FIEC (European Construction Industry Federation) (with the support of the European Commission), 23 January 2020, COMMONS, Bucharest [invited; onsite] 

  • Tackling Undeclared Work In the Construction Sector (TUWIC), Tackling undeclared work in the construction sector in Romania (Combaterea muncii nedeclarate în sectorul de construcÈ›ii din România), EFBWW (European Federation of Building and Woodworkers) and FIEC (European Construction Industry Federation) (with the support of the European Commission), 21 Februarie 2020, Hotel Opera Plaza, Cluj-Napoca [invited speaker; presentation: Factors influencing the decision to engage in undeclared work (Factori care influenÈ›ează decizia de a desfășura muncă nedeclarată); onsite]

  • Tackling Undeclared Work in the Construction Industry, E-Conference of the European social partners in the construction industry EFBWW (European Federation of Building and Woodworkers) and FIEC (European Construction Industry Federation) (with the support of the European Commission), 24th September 2020 [online]

  • Plenary meeting of the European Platform tackling undeclared work / European Commission, 5-6 October 2020, 5 October 2020 - Thematic discussion on 'Tackling undeclared work in the collaborative economy and related to new forms of work’  [invited, online]

  • Economic Inclusion and the Informal Sector, Designing a regulatory environment for economic inclusion, Webinar, 8 October 2020, Centre for Development and Enterprise [online]

  • Seminar series by the Centre for Research on Work and Organisations - "Explaining and tackling undeclared work: reflections on a European journey", 27 January 2021, University of Southampton, UK [online]

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