Title: Can informal economic activities be explained by social and institutional factors? A comparative analysis
Authors: Adriaenssens, Stef ×
Hendrickx, Jef #
Issue Date: Oct-2015
Publisher: Oxford University Press
Series Title: Socio-Economic Review vol:13 issue:4 pages:627-649
Abstract: Empirical literature on informal activities often builds on macro-economic country estimates, which impedes testing behavioural hypotheses. The European Social Survey, documenting self-reported tax evasion in 26 countries, allows to test individual and institutional factors simultaneously. We model the effect of institutional and social capital factors affecting informal transactions. We predict that informality is fostered by social relations and trust, and curbed by institutional trust. Regulation and taxation fuel informal transactions, while effective enforcement inhibits them.
These predictions are simultaneously tested with individual level data from the ESS, complemented with country level data on regulation, taxation levels and enforcement. Multilevel binary and multinomial logit, fixed-effect, MCMC and AGQ regressions confirm the predictions regarding social capital, trust and tax burden. Contrary to much prior research, we find weak and inconsistent effects of regulation and enforcement, which may also be due to the limited variation of our country sample.
ISSN: 1475-1461
Publication status: published
KU Leuven publication type: IT
Appears in Collections:Research Centre for Work and Organisation Studies (WOS Bxl), Campus Brussels
Faculty of Economics and Business (FEB) - miscellaneous
Research Centre for Mathematical Economics, Econometrics and Statistics, Campus Brussels (-)
× corresponding author
# (joint) last author

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