Tackling the undeclared economy in the European Union: an evaluation of the tax morale approach

an article by Colin C Williams and Ioana A Horodnic (University of Sheffield, UK) published in Industrial Relations Volume 47 Issue 4 (July 2016)

Abstract

To evaluate a new approach towards tackling the undeclared economy, which views participants as social actors rather than rational economic actors, this article reports evidence from 27,563 face-to-face interviews conducted across the European Union during 2013.

Multilevel logistic regression analysis reveals a strong association between participation in undeclared work and the level of tax morale.

Finding that higher tax morale (and thus a lower propensity to engage in undeclared work) is strongly correlated with greater levels of state intervention but also with individual-level characteristics such as gender, age, education and employment status, the article concludes not only by confirming a political economy approach and refuting modernization and neo-liberal explanations and remedies, but also by revealing for the first time the importance of solutions not so far considered, including improving educational attainment, older citizens mentoring for younger people and improving women's participation in the labour force.

Full text (PDF 19pp)

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