<abstract xmlns="http://www.w3.org/1999/xhtml">

<p>Institutional theory has explained informal employment to result from formal institutional failings. The aim of this paper is to identify the formal institutional failings associated with informal employment so that action can be taken by governments. Using the Tobit model for econometric analysis and reporting conditional and unconditional marginal effects of the 2021 Balkans Business Barometer survey conducted in six Western Balkan economies (Albania, Bosnia and Herzegovina, Kosovo, North Macedonia, Montenegro and Serbia), the contribution of this paper is to reveal that the perceived incidence and share of informal employment is significantly associated with businesses perceiving governance, public integrity and corruption as very negative or negative, the perception that the government does not consider business concerns and business dissatisfaction with public services. However, the perceived incidence and share of informal employment is not significantly associated with the views of business on tax rates and tax administration, or the perceived instability and lack of predictability of government. The theoretical and policy implications are then discussed.</p>
</abstract>

Institutional theory has explained informal employment to result from formal institutional failings. The aim of this paper is to identify the formal institutional failings associated with informal employment so that action can be taken by governments. Using the Tobit model for econometric analysis and reporting conditional and unconditional marginal effects of the 2021 Balkans Business Barometer survey conducted in six Western Balkan economies (Albania, Bosnia and Herzegovina, Kosovo, North Macedonia, Montenegro and Serbia), the contribution of this paper is to reveal that the perceived incidence and share of informal employment is significantly associated with businesses perceiving governance, public integrity and corruption as very negative or negative, the perception that the government does not consider business concerns and business dissatisfaction with public services. However, the perceived incidence and share of informal employment is not significantly associated with the views of business on tax rates and tax administration, or the perceived instability and lack of predictability of government. The theoretical and policy implications are then discussed.

Formal Institutional Failings and Informal Employment: Evidence from the Western Balkans

South East European Journal of Economics and Business

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Institutional theory has explained informal employment to result from formal institutional failings. The aim of this paper is to identify the formal...

Formal Institutional Failings and Informal Employment: Evidence from the Western Balkans

Published Online: Dec 23, 2022

Page range: 83 - 95

DOI: https://doi.org/10.2478/jeb-2022-0016

Keywords
informal economy, undeclared work, shadow economy, tax evasion, institutional theory, public policy

© 2022 Colin C. Williams et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Formal Institutional Failings and Informal Employment: Evidence from the Western Balkans

Published Online: Dec 23, 2022

Page range: 83 - 95

DOI: https://doi.org/10.2478/jeb-2022-0016

Keywordsinformal economy, undeclared work, shadow economy, tax evasion, institutional theory, public policy

© 2022 Colin C. Williams et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Keywords
informal economy, undeclared work, shadow economy, tax evasion, institutional theory, public policy