Social Distance and Informal Employment Reporting

Roberto Dell'Anno and Marcello Puca
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Roberto Dell'Anno: Department of Economics and Statistics - University of Salerno - Italy and CELPE
Marcello Puca: Department of Economics and Statistics - University of Salerno - Italy, CELPE and CSEF

No 177, CELPE Discussion Papers from CELPE - CEnter for Labor and Political Economics, University of Salerno, Italy

Abstract: Measuring illicit behavior such as tax evasion and underground economy through surveys is challenging due to social desirability bias. We examine how interviewer–respondent social distance affects the reporting of informal employment in an anonymous survey conducted by university students. Using variation in the relationship between inter- viewer and respondent, we estimate probit models and find that disclosure is lowest when the interviewer is a relative or friend, and higher when the interviewer is either an immediate family member or someone with no prior connection. This non-monotonic pattern suggests that both trust and anonymity facilitate truthful reporting, while intermediate social proximity increases self-censorship. The findings highlight a previously overlooked source of measurement error in survey-based estimates of informal labor.

Keywords: Survey Methods; Informality; Tax Evasion; Social Distance (search for similar items in EconPapers)
JEL-codes: C83 H26 J46 (search for similar items in EconPapers)
Pages: 18
Date: 2025
New Economics Papers: this item is included in nep-iue and nep-soc
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