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Characteristics of Undeclared Work in Service Sector in Countries of South East Europe

Author

Listed:
  • Predrag Bejaković Ruslan Stefanov

    (Institute of Public Finance, Zagreb, Croatia. Vitosha Research, Sofia, Bulgaria.)

Abstract

The undeclared work is a complex and multifaceted phenomenon that has been present in all countries, regardless of its social and political establishment. Notwithstanding, the empirical evidence suggests that informal economy is more prevalent in countries with lower levels of GDP. Furthermore, the informal economy is present in sectors with lower level of capital and higher level of labour intensity. Therefore, the theory and everyday experience imply that the informal economy is more widespread among the services than the goods sectors. This paper provides an overview on the informal work and unofficial economy in the services sector in the former socialist countries in South East Europe. For the reduction of undeclared activities, it is necessary to simplify the procedures for establishing small businesses, to stabilize the tax system, to ensure high tax morale and trust in society and towards institutions, and to decrease the state regulatory burden. JEL Classification: E 26, L83, O17, Z31

Suggested Citation

  • Predrag Bejaković Ruslan Stefanov, 2019. "Characteristics of Undeclared Work in Service Sector in Countries of South East Europe," Zagreb International Review of Economics and Business, Faculty of Economics and Business, University of Zagreb, vol. 22(1), pages 107-131, May.
    • Handle: RePEc:zag:zirebs:v:22:y:2019:i:1:p:107-131
    DOI: 10.2478/zireb-2019-0015
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    More about this item

    Keywords

    undeclared work; post-transition; South East Europe; service sector;
    All these keywords.

    JEL classification:

    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • Z31 - Other Special Topics - - Tourism Economics - - - Industry Studies

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