What Explains Prevalence of Informal Employment in European Countries : The Role of Labor Institutions, Governance, Immigrants, and Growth
This paper looks into institutional and other macro determinants of prevalence of informal dependent employment, as well as informal self-employment, in European countries, using European Social Survey data on work without legal contract in on 30 c...
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| Format: | Policy Research Working Paper |
| Language: | English |
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2012
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| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20111214174555 http://hdl.handle.net/10986/3687 |
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okr-10986-3687 |
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| recordtype |
oai_dc |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
ACCOUNTING ACTIVE LABOR ACTIVE LABOR MARKET ACTIVE LABOR MARKET POLICY ADVERSE IMPACT ASSESSING LABOR MARKET AVERAGE UNEMPLOYMENT AVERAGE WAGE BANKRUPTCY BARGAINING BUSINESS CYCLE CAPITAL STOCK CHECKS COMPARATIVE ADVANTAGE COMPETITIVENESS CONTRACT ENFORCEMENT CREDIT CONSTRAINT DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISCOURAGED WORKERS ECONOMIC DEVELOPMENT ECONOMIC GROWTH EMPLOYABILITY EMPLOYEE EMPLOYEE BENEFITS EMPLOYMENT MODELS EMPLOYMENT PROTECTION LEGISLATION EMPLOYMENT RELATIONSHIP EMPLOYMENT STATUS ENTRY BARRIER EXPORTS FAIR FINANCIAL CAPITAL FINANCIAL MARKET FINANCIAL MARKETS FISCAL BURDEN FORMAL LABOR MARKET GDP GDP PER CAPITA GOVERNMENT EXPENDITURES GOVERNMENT SPENDING HUMAN CAPITAL HUMAN DEVELOPMENT IMPLICIT TAX INCOME INCOME EFFECT INCOME INEQUALITY INCOME LEVEL INFLATION INFLATIONARY PRESSURE INFORMAL ECONOMY INFORMAL EMPLOYMENT INFORMAL SECTOR INNOVATION INTERNATIONAL BANK INVESTMENT CLIMATE JOB CREATION JOB DESTRUCTION JOB SECURITY JOBS LABOR COST LABOR COSTS LABOR DEMAND LABOR FORCE LABOR FORCE PARTICIPATION LABOR MARKET LABOR MARKET DISCRIMINATION LABOR MARKET FLEXIBILITY LABOR MARKET IMPACT LABOR MARKET INSTITUTIONS LABOR MARKET PERFORMANCE LABOR MARKET POLICY LABOR MARKET REGULATIONS LABOR SUPPLY LEGAL ENVIRONMENT LONG-TERM UNEMPLOYMENT LOW TRUST MARGINAL COST MARGINAL COST OF PRODUCTION MARGINAL PRODUCTS MARKET WAGE MINIMUM WAGE MOTIVATION PASSIVE LABOR PENSION PENSION SYSTEM PRESENT VALUE PRICE CONTROLS PRICE STABILITY PRODUCT MARKET PRODUCT MARKET REGULATION PRODUCT MARKET REGULATIONS PRODUCT MARKETS PRODUCTION FUNCTION PRODUCTION OUTPUT PROFIT MAXIMIZATION PROPERTY RIGHTS PUBLIC SERVICES REAL GDP REGULATORY FRAMEWORK RETURNS RIGID LABOR MARKET RULE OF LAW SCALE EFFECT SCALE EFFECTS SIDE EFFECTS SUBSTITUTE SUBSTITUTES SUBSTITUTION SUBSTITUTION EFFECT SUBSTITUTION EFFECTS TAX TAX RATE TAX RATES TAXATION TOTAL FACTOR PRODUCTIVITY TRADE UNION TRADE UNIONS TRAINING COSTS TRANSITION COUNTRIES TURNOVER UNEMPLOYED UNEMPLOYED PERSON UNEMPLOYMENT UNEMPLOYMENT BENEFIT UNEMPLOYMENT BENEFITS UNEMPLOYMENT EXPERIENCE UNEMPLOYMENT INSURANCE UNEMPLOYMENT LEVEL UNEMPLOYMENT RATE UNION DENSITY UTILITY FUNCTIONS UTILITY MAXIMIZATION WAGE EFFECT WAGE EFFECTS WAGE EMPLOYMENT WAGE LEVEL WAGE LEVELS WAGE RATE WAGES WEALTH WORKER WORKING CONDITIONS |
| spellingShingle |
ACCOUNTING ACTIVE LABOR ACTIVE LABOR MARKET ACTIVE LABOR MARKET POLICY ADVERSE IMPACT ASSESSING LABOR MARKET AVERAGE UNEMPLOYMENT AVERAGE WAGE BANKRUPTCY BARGAINING BUSINESS CYCLE CAPITAL STOCK CHECKS COMPARATIVE ADVANTAGE COMPETITIVENESS CONTRACT ENFORCEMENT CREDIT CONSTRAINT DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISCOURAGED WORKERS ECONOMIC DEVELOPMENT ECONOMIC GROWTH EMPLOYABILITY EMPLOYEE EMPLOYEE BENEFITS EMPLOYMENT MODELS EMPLOYMENT PROTECTION LEGISLATION EMPLOYMENT RELATIONSHIP EMPLOYMENT STATUS ENTRY BARRIER EXPORTS FAIR FINANCIAL CAPITAL FINANCIAL MARKET FINANCIAL MARKETS FISCAL BURDEN FORMAL LABOR MARKET GDP GDP PER CAPITA GOVERNMENT EXPENDITURES GOVERNMENT SPENDING HUMAN CAPITAL HUMAN DEVELOPMENT IMPLICIT TAX INCOME INCOME EFFECT INCOME INEQUALITY INCOME LEVEL INFLATION INFLATIONARY PRESSURE INFORMAL ECONOMY INFORMAL EMPLOYMENT INFORMAL SECTOR INNOVATION INTERNATIONAL BANK INVESTMENT CLIMATE JOB CREATION JOB DESTRUCTION JOB SECURITY JOBS LABOR COST LABOR COSTS LABOR DEMAND LABOR FORCE LABOR FORCE PARTICIPATION LABOR MARKET LABOR MARKET DISCRIMINATION LABOR MARKET FLEXIBILITY LABOR MARKET IMPACT LABOR MARKET INSTITUTIONS LABOR MARKET PERFORMANCE LABOR MARKET POLICY LABOR MARKET REGULATIONS LABOR SUPPLY LEGAL ENVIRONMENT LONG-TERM UNEMPLOYMENT LOW TRUST MARGINAL COST MARGINAL COST OF PRODUCTION MARGINAL PRODUCTS MARKET WAGE MINIMUM WAGE MOTIVATION PASSIVE LABOR PENSION PENSION SYSTEM PRESENT VALUE PRICE CONTROLS PRICE STABILITY PRODUCT MARKET PRODUCT MARKET REGULATION PRODUCT MARKET REGULATIONS PRODUCT MARKETS PRODUCTION FUNCTION PRODUCTION OUTPUT PROFIT MAXIMIZATION PROPERTY RIGHTS PUBLIC SERVICES REAL GDP REGULATORY FRAMEWORK RETURNS RIGID LABOR MARKET RULE OF LAW SCALE EFFECT SCALE EFFECTS SIDE EFFECTS SUBSTITUTE SUBSTITUTES SUBSTITUTION SUBSTITUTION EFFECT SUBSTITUTION EFFECTS TAX TAX RATE TAX RATES TAXATION TOTAL FACTOR PRODUCTIVITY TRADE UNION TRADE UNIONS TRAINING COSTS TRANSITION COUNTRIES TURNOVER UNEMPLOYED UNEMPLOYED PERSON UNEMPLOYMENT UNEMPLOYMENT BENEFIT UNEMPLOYMENT BENEFITS UNEMPLOYMENT EXPERIENCE UNEMPLOYMENT INSURANCE UNEMPLOYMENT LEVEL UNEMPLOYMENT RATE UNION DENSITY UTILITY FUNCTIONS UTILITY MAXIMIZATION WAGE EFFECT WAGE EFFECTS WAGE EMPLOYMENT WAGE LEVEL WAGE LEVELS WAGE RATE WAGES WEALTH WORKER WORKING CONDITIONS Hazans, Mihails What Explains Prevalence of Informal Employment in European Countries : The Role of Labor Institutions, Governance, Immigrants, and Growth |
| geographic_facet |
Europe and Central Asia |
| relation |
Policy Research working paper ; no. WPS 5917 |
| description |
This paper looks into institutional and
other macro determinants of prevalence of informal dependent
employment, as well as informal self-employment, in European
countries, using European Social Survey data on work without
legal contract in on 30 countries, covering years 2004-2009.
Consistently with theoretical predictions, quality of
business environment has a significant negative impact on
prevalence of both types of informal employment. The share
of non-contracted employees is negatively affected by
perceived quality of public services and positively related
to economic growth. Informal self-employment is positively
related to growth in Europe at large, as well as in Eastern
and Southern Europe. The level of GDP per capita also has a
positive impact on the prevalence of informal employment in
Europe at large and within Eastern and Southern Europe,
whilst an opposite effect is found in Western and Northern
Europe. Other things equal, the share of non-contracted
employees in the labor force across European countries
increases with the minimum-to-average wage ratio, with union
density, with the share of first and second generation
immigrants, and with income inequality, but falls with
stricter employment protection legislation (EPL) and higher
tax wedge on labor. Thus it appears that in Europe at large,
labor cost effects of EPL and taxes are weaker than their
impact via perceptions of job security and law enforcement,
along with tax morale and the income effect. Yet the EPL
effect on informality is positive (i.e., cost-related) when
either Eastern and Southern Europe or Western and Northern
Europe are considered separately. Furthermore, within
Western and Northern Europe, the minimum wage effect is
negative, whilst within Eastern and Southern Europe, the
union effect is negative; in both cases, we offer a supply
side explanation. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Hazans, Mihails |
| author_facet |
Hazans, Mihails |
| author_sort |
Hazans, Mihails |
| title |
What Explains Prevalence of Informal Employment in European Countries : The Role of Labor Institutions, Governance, Immigrants, and Growth |
| title_short |
What Explains Prevalence of Informal Employment in European Countries : The Role of Labor Institutions, Governance, Immigrants, and Growth |
| title_full |
What Explains Prevalence of Informal Employment in European Countries : The Role of Labor Institutions, Governance, Immigrants, and Growth |
| title_fullStr |
What Explains Prevalence of Informal Employment in European Countries : The Role of Labor Institutions, Governance, Immigrants, and Growth |
| title_full_unstemmed |
What Explains Prevalence of Informal Employment in European Countries : The Role of Labor Institutions, Governance, Immigrants, and Growth |
| title_sort |
what explains prevalence of informal employment in european countries : the role of labor institutions, governance, immigrants, and growth |
| publishDate |
2012 |
| url |
http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20111214174555 http://hdl.handle.net/10986/3687 |
| _version_ |
1764387816258666496 |
| spelling |
okr-10986-36872021-04-23T14:02:11Z What Explains Prevalence of Informal Employment in European Countries : The Role of Labor Institutions, Governance, Immigrants, and Growth Hazans, Mihails ACCOUNTING ACTIVE LABOR ACTIVE LABOR MARKET ACTIVE LABOR MARKET POLICY ADVERSE IMPACT ASSESSING LABOR MARKET AVERAGE UNEMPLOYMENT AVERAGE WAGE BANKRUPTCY BARGAINING BUSINESS CYCLE CAPITAL STOCK CHECKS COMPARATIVE ADVANTAGE COMPETITIVENESS CONTRACT ENFORCEMENT CREDIT CONSTRAINT DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISCOURAGED WORKERS ECONOMIC DEVELOPMENT ECONOMIC GROWTH EMPLOYABILITY EMPLOYEE EMPLOYEE BENEFITS EMPLOYMENT MODELS EMPLOYMENT PROTECTION LEGISLATION EMPLOYMENT RELATIONSHIP EMPLOYMENT STATUS ENTRY BARRIER EXPORTS FAIR FINANCIAL CAPITAL FINANCIAL MARKET FINANCIAL MARKETS FISCAL BURDEN FORMAL LABOR MARKET GDP GDP PER CAPITA GOVERNMENT EXPENDITURES GOVERNMENT SPENDING HUMAN CAPITAL HUMAN DEVELOPMENT IMPLICIT TAX INCOME INCOME EFFECT INCOME INEQUALITY INCOME LEVEL INFLATION INFLATIONARY PRESSURE INFORMAL ECONOMY INFORMAL EMPLOYMENT INFORMAL SECTOR INNOVATION INTERNATIONAL BANK INVESTMENT CLIMATE JOB CREATION JOB DESTRUCTION JOB SECURITY JOBS LABOR COST LABOR COSTS LABOR DEMAND LABOR FORCE LABOR FORCE PARTICIPATION LABOR MARKET LABOR MARKET DISCRIMINATION LABOR MARKET FLEXIBILITY LABOR MARKET IMPACT LABOR MARKET INSTITUTIONS LABOR MARKET PERFORMANCE LABOR MARKET POLICY LABOR MARKET REGULATIONS LABOR SUPPLY LEGAL ENVIRONMENT LONG-TERM UNEMPLOYMENT LOW TRUST MARGINAL COST MARGINAL COST OF PRODUCTION MARGINAL PRODUCTS MARKET WAGE MINIMUM WAGE MOTIVATION PASSIVE LABOR PENSION PENSION SYSTEM PRESENT VALUE PRICE CONTROLS PRICE STABILITY PRODUCT MARKET PRODUCT MARKET REGULATION PRODUCT MARKET REGULATIONS PRODUCT MARKETS PRODUCTION FUNCTION PRODUCTION OUTPUT PROFIT MAXIMIZATION PROPERTY RIGHTS PUBLIC SERVICES REAL GDP REGULATORY FRAMEWORK RETURNS RIGID LABOR MARKET RULE OF LAW SCALE EFFECT SCALE EFFECTS SIDE EFFECTS SUBSTITUTE SUBSTITUTES SUBSTITUTION SUBSTITUTION EFFECT SUBSTITUTION EFFECTS TAX TAX RATE TAX RATES TAXATION TOTAL FACTOR PRODUCTIVITY TRADE UNION TRADE UNIONS TRAINING COSTS TRANSITION COUNTRIES TURNOVER UNEMPLOYED UNEMPLOYED PERSON UNEMPLOYMENT UNEMPLOYMENT BENEFIT UNEMPLOYMENT BENEFITS UNEMPLOYMENT EXPERIENCE UNEMPLOYMENT INSURANCE UNEMPLOYMENT LEVEL UNEMPLOYMENT RATE UNION DENSITY UTILITY FUNCTIONS UTILITY MAXIMIZATION WAGE EFFECT WAGE EFFECTS WAGE EMPLOYMENT WAGE LEVEL WAGE LEVELS WAGE RATE WAGES WEALTH WORKER WORKING CONDITIONS This paper looks into institutional and other macro determinants of prevalence of informal dependent employment, as well as informal self-employment, in European countries, using European Social Survey data on work without legal contract in on 30 countries, covering years 2004-2009. Consistently with theoretical predictions, quality of business environment has a significant negative impact on prevalence of both types of informal employment. The share of non-contracted employees is negatively affected by perceived quality of public services and positively related to economic growth. Informal self-employment is positively related to growth in Europe at large, as well as in Eastern and Southern Europe. The level of GDP per capita also has a positive impact on the prevalence of informal employment in Europe at large and within Eastern and Southern Europe, whilst an opposite effect is found in Western and Northern Europe. Other things equal, the share of non-contracted employees in the labor force across European countries increases with the minimum-to-average wage ratio, with union density, with the share of first and second generation immigrants, and with income inequality, but falls with stricter employment protection legislation (EPL) and higher tax wedge on labor. Thus it appears that in Europe at large, labor cost effects of EPL and taxes are weaker than their impact via perceptions of job security and law enforcement, along with tax morale and the income effect. Yet the EPL effect on informality is positive (i.e., cost-related) when either Eastern and Southern Europe or Western and Northern Europe are considered separately. Furthermore, within Western and Northern Europe, the minimum wage effect is negative, whilst within Eastern and Southern Europe, the union effect is negative; in both cases, we offer a supply side explanation. 2012-03-19T18:06:51Z 2012-03-19T18:06:51Z 2011-12-01 http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20111214174555 http://hdl.handle.net/10986/3687 English Policy Research working paper ; no. WPS 5917 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Publications & Research :: Policy Research Working Paper Europe and Central Asia |