Drawing inspiration from institutional theory, a small sub-stream of literature has proposed that participation in the informal economy arises from the lack of alignment of a society's formal institutions (i.e., its codified laws and regulations) with its informal institutions (i.e., the norms, values and beliefs of its population). To further advance this explanation, this paper reports a 2013 Eurobarometer survey involving 27,563 face-to-face interviews across 28 European countries. The finding is that there is a strong association between the degree to which formal and informal institutions are unaligned and participation in the informal economy. The greater is the asymmetry between the formal and informal institutions, the more likely is participation in the informal economy at both the individual-, population groupand country-level. A new policy approach for tackling the informal economy which focuses upon reducing this institutional incongruence is then discussed.

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Most studies of paid informal exchange evaluate its varying magnitude across space and social groups. Little attention, however, has been paid to the variable nature of paid informal exchange. Instead, the unchallenged assumption is that such exchanges are universally conducted under work relations akin to formal employment for profit-motivated purposes. To evaluate critically this dominant conceptualisation of the character of paid informal exchange, empirical research is here reported from lower-income and higher-income neighbourhoods of two English cities. This identifies that although most paid informal exchange in affluent suburbs is conducted under market-like relations for economic gain, this is not the case in lower-income neighbourhoods. Here, such exchange is more undertaken for and by friends, neighbours, and relatives for an array of reasons associated with developing social capital and/or redistribution. We conclude by suggesting that a more socially, culturally, and geographically embedded appreciation of the nature of paid informal exchange is now required alongside a fuller exploration of its implications for policy.

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