IDEAS home Printed from https://ideas.repec.org/a/vrs/manmar/v19y2024i2p307-335n1007.html
   My bibliography  Save this article

Informality and Inclusion: Assessing the effects of the Shadow Economy and informal labour in Europe

Author

Listed:
  • Davidescu Adriana AnaMaria

    (Bucharest University of Economic Studies, Bucharest, Romania)

  • Manta Eduard Mihai

    (Bucharest University of Economic Studies, Bucharest, Romania)

  • Geambasu Cristina Maria

    (Bucharest University of Economic Studies, Bucharest, Romania)

  • Birlan Ioana

    (Bucharest University of Economic Studies, Bucharest, Romania)

Abstract

The informal economy, often characterized by unregulated and untaxed economic activities, has significant yet understudied implications for sustainable development and inclusivity. This paper explores the influence of the size of the shadow economy and undeclared work patterns (envelope wage, without a formal contract and bogus self-employed) on the Leave No One Behind Index and the Sustainable Development Index developed by the United Nations across European countries from 2000 to 2021. Employing panel data regression models, the research investigates the differential impacts of informality on these indices, revealing a negative correlation with the informal economy and a positive association with various forms of undeclared work. The analysis, comprising 18 models segmented by region – Central and Eastern Europe, Western Europe, and Europe – demonstrates that the adverse effects of the informal economy are more pronounced, whereas the positive contributions of undeclared work patterns are subtler, yet significant. The study’s findings suggest a complex interaction between informal economic activities and sustainable development goals, challenging the conventional perspective on informality and its role in inclusive development. The results indicate that while the shadow economy may hinder broad development efforts, informal labor arrangements support vulnerable populations, underscoring the need for nuanced policy interventions that recognize the multifaceted nature of work and its impacts on development.

Suggested Citation

  • Davidescu Adriana AnaMaria & Manta Eduard Mihai & Geambasu Cristina Maria & Birlan Ioana, 2024. "Informality and Inclusion: Assessing the effects of the Shadow Economy and informal labour in Europe," Management & Marketing, Sciendo, vol. 19(2), pages 307-335.
    • Handle: RePEc:vrs:manmar:v:19:y:2024:i:2:p:307-335:n:1007
    DOI: 10.2478/mmcks-2024-0014
    as

    Download full text from publisher

    File URL: https://doi.org/10.2478/mmcks-2024-0014
    Download Restriction: no
    File URL: https://libkey.io/10.2478/mmcks-2024-0014?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Raluca-Giorgiana (Popa) Chivu & Ionuț-Claudiu Popa & Mihai-Cristian Orzan & Cristian Marinescu & Margareta Stela Florescu & Anca-Olguța Orzan, 2022. "The Role of Blockchain Technologies in the Sustainable Development of Students’ Learning Process," Sustainability, MDPI, vol. 14(3), pages 1-16, January.
    2. François Bourguignon, 2015. "The Globalization of Inequality," Economics Books, Princeton University Press, edition 1, number 10433.
    3. Rafael La Porta & Andrei Shleifer, 2014. "Informality and Development," Journal of Economic Perspectives, American Economic Association, vol. 28(3), pages 109-126, Summer.
    4. Leandro Medina & Mr. Friedrich Schneider, 2018. "Shadow Economies Around the World: What Did We Learn Over the Last 20 Years?," IMF Working Papers 2018/017, International Monetary Fund.
    5. Colin C. Williams & Sara Nadin, 2010. "Entrepreneurship And The Informal Economy: An Overview," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 15(04), pages 361-378.
    6. Alina Mihaela Dima & Mihail Busu & Vanesa Madalina Vargas, 2022. "The mediating role of students’ ability to adapt to online activities on the relationship between perceived university culture and academic performance," Oeconomia Copernicana, Institute of Economic Research, vol. 13(4), pages 1253-1281, December.
    7. Marty Chen, 2005. "Rethinking the Informal Economy: Linkages with the Formal Economy and the Formal Regulatory Environment," WIDER Working Paper Series RP2005-10, World Institute for Development Economic Research (UNU-WIDER).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Loudi Njoya & Ibrahim Ngouhouo & Moussa Njoupouognigni & Schneider Friederich & Zenabou Tourere, 2024. "Can we understand the simultaneous evolution between economic and informality growth in Africa? A preliminary explanation," Journal of International Development, John Wiley & Sons, Ltd., vol. 36(1), pages 398-414, January.
    2. Djidonou, Gbenoukpo Robert & Foster-McGregor, Neil, 2022. "Stagnant manufacturing growth in India: The role of the informal economy," Structural Change and Economic Dynamics, Elsevier, vol. 63(C), pages 528-543.
    3. Salinas, Aldo & Ortiz, Cristian & Changoluisa, Javier & Muffatto, Moreno, 2023. "Testing three views about the determinants of informal economy: New evidence at global level and by country groups using the CS-ARDL approach," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 438-455.
    4. Colin C. Williams, 2023. "A Modern Guide to the Informal Economy," Books, Edward Elgar Publishing, number 18668.
    5. Estrin, Saul & Guerrero, Maribel & Mickiewicz, Tomasz, 2024. "A framework for investigating new firm entry: The (limited) overlap between informal-formal and necessity-opportunity entrepreneurship," Journal of Business Venturing, Elsevier, vol. 39(4).
    6. Ligita Gasparėnienė & Rita Remeikienė & Colin C. Williams, 2022. "Unemployment and the Informal Economy," SpringerBriefs in Economics, Springer, number 978-3-030-96687-4, April.
    7. Luc Jacolin & Joseph Keneck Massil & Alphonse Noah, 2021. "Informal sector and mobile financial services in emerging and developing countries: Does financial innovation matter?," The World Economy, Wiley Blackwell, vol. 44(9), pages 2703-2737, September.
    8. Phoebe W. Ishak & Mohammad Reza Farzanegan, 2022. "Oil price shocks, protest, and the shadow economy: Is there a mitigation effect?," Economics and Politics, Wiley Blackwell, vol. 34(2), pages 298-321, July.
    9. Stephen Esaku, 2022. "Institutionalized democracy and the shadow economy in the short- and long-run: empirical analysis from Uganda," Palgrave Communications, Palgrave Macmillan, vol. 9(1), pages 1-12, December.
    10. Yingyao Hu & Jiaxiong Yao, 2019. "Illuminating Economic Growth," IMF Working Papers 2019/077, International Monetary Fund.
    11. Atangana Ondoa Henri & Seabrook Arthur Mveng, 2022. "Did state antiquity matter for the size of the informal economy?," Economics of Governance, Springer, vol. 23(2), pages 115-131, June.
    12. Ceyhun Elgin, 2020. "Shadow Economies Around the World: Evidence from Metropolitan Areas," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 46(2), pages 301-322, April.
    13. Roberto Dell'Anno, 2022. "Theories and definitions of the informal economy: A survey," Journal of Economic Surveys, Wiley Blackwell, vol. 36(5), pages 1610-1643, December.
    14. Cong Minh Huynh & Vu Hong Thai Nguyen & Hoang Bao Nguyen & Phuc Canh Nguyen, 2020. "One-way effect or multiple-way causality: foreign direct investment, institutional quality and shadow economy?," International Economics and Economic Policy, Springer, vol. 17(1), pages 219-239, February.
    15. Gutiérrez-Romero, Roxana, 2021. "Inequality, persistence of the informal economy, and club convergence," World Development, Elsevier, vol. 139(C).
    16. Alba, Carlos & McKnight, Stephen, 2022. "Laffer curves in emerging market economies: The role of informality," Journal of Macroeconomics, Elsevier, vol. 72(C).
    17. Arbex Marcelo & Corrêa Márcio V. & Magalhães Marcos R. V., 2023. "Tolerance of Informality and Occupational Choices in a Large Informal Sector Economy," The B.E. Journal of Macroeconomics, De Gruyter, vol. 23(1), pages 241-278, January.
    18. Lv, Zhike, 2020. "Does tourism affect the informal sector?," Annals of Tourism Research, Elsevier, vol. 80(C).
    19. Usman Ladan & Colin C. Williams, 2019. "Evaluating Theorizations Of Informal Sector Entrepreneurship: Some Lessons From Zamfara, Nigeria," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 24(04), pages 1-18, December.
    20. Ligita Gasparėnienė & Rita Remeikienė & Colin C. Williams, 2022. "Theorizing the Informal Economy," SpringerBriefs in Economics, in: Unemployment and the Informal Economy, chapter 0, pages 7-60, Springer.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:vrs:manmar:v:19:y:2024:i:2:p:307-335:n:1007. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.sciendo.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.