<abstract xmlns="http://www.w3.org/1999/xhtml"><p> This paper proposes a way of explaining the undeclared economy that represents participation in undeclared work as a violation of the social contract between the state and its citizens, and as arising when the informal institutions comprising the norms, values and beliefs of citizens (civic morality) do not align with the codified laws and regulations of a society’s formal institutions (state morality). Drawing upon evidence from 1,018 face-to-face interviews conducted in Bulgaria during 2013, the finding is that the greater is the asymmetry between formal and informal institutions (i.e., citizens’ civic morality and state morality), the greater is the likelihood of participation in the undeclared economy, and vice versa. The outcome is that tackling the undeclared economy requires a focus upon reducing this lack of alignment of formal and informal institutions. How this can be achieved in Bulgaria in particular and South-East Europe and beyond more generally, is then discussed.</p></abstract>

This paper proposes a way of explaining the undeclared economy that represents participation in undeclared work as a violation of the social contract between the state and its citizens, and as arising when the informal institutions comprising the norms, values and beliefs of citizens (civic morality) do not align with the codified laws and regulations of a society’s formal institutions (state morality). Drawing upon evidence from 1,018 face-to-face interviews conducted in Bulgaria during 2013, the finding is that the greater is the asymmetry between formal and informal institutions (i.e., citizens’ civic morality and state morality), the greater is the likelihood of participation in the undeclared economy, and vice versa. The outcome is that tackling the undeclared economy requires a focus upon reducing this lack of alignment of formal and informal institutions. How this can be achieved in Bulgaria in particular and South-East Europe and beyond more generally, is then discussed.

Explaining the Undeclared Economy in Bulgaria: an Institutional Asymmetry Perspective

Professor of Public Policy Management School, University of Sheffield, UK

Marie Curie Research Fellow Management School, University of Sheffield, UK

South East European Journal of Economics and Business

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

This paper proposes a way of explaining the undeclared economy that represents participation in undeclared work as a violation of the social contract between...

Explaining the Undeclared Economy in Bulgaria: an Institutional Asymmetry Perspective

Published Online: Mar 13, 2015

Page range: 33 - 45

DOI: https://doi.org/10.2478/jeb-2014-0008

Keywords
informal sector, shadow economy, tax morale, institutional theory, Bulgaria, South-East Europe

© South East European Journal of Economics and Business

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Explaining the Undeclared Economy in Bulgaria: an Institutional Asymmetry Perspective

Published Online: Mar 13, 2015

Page range: 33 - 45

DOI: https://doi.org/10.2478/jeb-2014-0008

Keywordsinformal sector, shadow economy, tax morale, institutional theory, Bulgaria, South-East Europe

© South East European Journal of Economics and Business

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Keywords
informal sector, shadow economy, tax morale, institutional theory, Bulgaria, South-East Europe