Shadow employment in post-transition--Is informal employment a matter of choice or no choice in Poland?

Stanisław Cichocki and Joanna Tyrowicz

Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), 2010, vol. 39, issue 4, 527-535

Abstract: According to a dualistic view, shadow employment may follow from two main labour market failures: (i) official market labour taxation distortions make it ineffective for some agents to engage in registered employment due to a tax wedge; or (ii) for some workers regular employment may be unattainable do to some high access costs or demand constraints, which results in seeking earning opportunities beyond the boundaries of the official labour market. Whereas in the first case revenues from unofficial employment should be higher than the corresponding official ones (tax evasion hypothesis), in the alternative explanation labour market tightness seems to be an underlying reason (market segmentation hypothesis). We use a unique data set from a survey on undeclared employment from Poland. Using propensity score matching and decomposition techniques we demonstrate that workers of shadow economy are characterised by slightly higher endowments, while their revenues are considerably lower than among matched official economy counterparts. Although unobservable heterogeneity is considerable, results are robust. Although this is not direct evidence, we believe these results point to the labour market segmentation hypothesis and endangerment with social exclusion.

Keywords: Undeclared; employment; Propensity; score; matching; Oaxaca-Blinder; decomposition; Transition (search for similar items in EconPapers)
Date: 2010
References: Add references at CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://www.sciencedirect.com/science/article/B6W5H ... ddc860e0ca15b773da51
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Shadow Employment in Transition - A Matter of Choice or No Choice? (2009)
Working Paper: Shadow Employment In Transition - A Matter of Choice or No Choice? (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:soceco:v:39:y:2010:i:4:p:527-535

Access Statistics for this article

Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics) is currently edited by Pablo Brañas Garza

More articles in Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics) from Elsevier
Bibliographic data for series maintained by Catherine Liu ().