Illegitimate Economic Practices in Croatia: Findings from a Representative Survey of 2,000 Citizens

Franić, Josip; Williams, Colin C.

doi:10.2139/ssrn.2932315

Cited by 8 publications

(8 citation statements)

References 57 publications

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“…However, this perception has started to change with some recent studies revealing that many workers are actually willing participants in this fraud. For instance, the representative survey of informal practices in the Balkan region conducted in 2015 showed that one in three quasi-formal workers was highly satisfied with their position (Franic & Williams, 2017;Williams & Bezeredi, 2017;Yang & Williams, 2017). As a matter of fact, some 30% of envelope wage earners in this part of Europe personally initiated such an arrangement.…”

Section: Nature and Causes Of Quasi-formal Employment: A Literature Rmentioning

confidence: 99%

Dissecting the illicit practice of wage underreporting: some evidence from Croatia

Franić

2020

Economic Research-Ekonomska Istraživanja

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Even though quasi-formal employment has become an integral part of European labour markets, not much is known about the functioning of this ingenious tax evasion scheme. To start to fill this gap, this paper elaborates the most important findings from qualitative interviews with 30 quasi-formal workers and 9 representatives of relevant institutions in Croatia. Among other important issues, this in-depth study, conducted during 2015 and 2016, aimed to explore the strategies that employers apply to ensure their workers' collaboration, as well as the schemes through which they extract cash for the unreported portion of the wage. The study revealed that not only can this practice subsist independently from undeclared work, but in certain circumstances it can even rely on cash flows that are fully visible to the authorities. Furthermore, we show that many quasi-formal workers are actually happy with their employment due to the mistaken belief that they earn more money this way. In addition to its theoretical significance, this paper also provides valuable practical information that could assist the authorities in their fight against this phenomenon.

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Section: Nature and Causes Of Quasi-formal Employment: A Literature Rmentioning

confidence: 99%

Dissecting the illicit practice of wage underreporting: some evidence from Croatia

Franić

2020

Economic Research-Ekonomska Istraživanja

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“…Nevertheless, some recent studies based on large-scale representative surveys have challenged the generalisability of this depiction. 5 An insight into the causes and nature of informal activities in South-East Europe, for instance, revealed that 3 out of 10 quasi-formal workers in those countries either personally initiated under-declaration or this was a mutual idea of theirs and their employer’s (Bezeredi and Williams, 2017; Franic and Williams, 2017). In fact, almost one-half of quasi-formal workers surveyed were more or less satisfied with receiving their take-home pay in two different parts.…”

Section: Drivers Of Quasi-formal Employment: a Literature Reviewmentioning

confidence: 99%

Explaining workers’ role in illegitimate wage underreporting practice: Evidence from the European Union

Franić

2019

The Economic and Labour Relations Review

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Despite substantial endeavours of international institutions and governments around the world to promote decent work, recent years have witnessed resurgence of non-standard and precarious labour practices. This article scrutinises one of the most recently described types of non-standard work, which is known as quasi-formal or under-declared employment. Companies relying on this illegitimate strategy, which is particularly prevalent in Europe, deliberately misreport the take-home pay of their formally employed workers. Alongside the officially declared wage, a quasi-formal worker thus receives an additional cash-in-hand payment which remains untaxed. To explore why so many European Union workers accept quasi-formal jobs in spite of obvious limitations, we report the evidence from interviews with 616 workers who were surveyed within the Special Eurobarometer 284/Wave 67.3. A two-level cumulative logistic regression emphasises tax morale and the exact function of the cash-in-hand payment as the key factors in this respect. On the other hand, neither perceived detection risk nor expected penalties are found to affect the readiness of quasi-formal workers to keep obeying an illegitimate arrangement with their employer. These findings therefore endorse recent studies on the matter, which illuminate low trust in the state and fellow citizens as the main reason for many workers to voluntarily misreport their income. JEL Codes: E26, H26, J46

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“…As already pointed out by Nestić & Rašić Bakarić (2008), workers could find their future pension benefit too low in cases of both early and regular retirement (since the difference is relatively small) and therefore are not motivated to stay in regular employment after becoming entitled to an EOAP. According to a survey carried out in Croatia in 2015, one third of Croatians believe that retired individuals are most likely to work on an undeclared basis compared with other employment statuses (Franic & Williams, 2017). It can be a neat way of combining income security by receiving a pension and earning opportunities by taking casual jobs.…”

Section: Inferential Findingsmentioning

confidence: 99%

Predictors of Early Retirement Intentions in Croatia

Bađun

Smolić

2018

Drustvena istrazivanja

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In this paper, we use the SHARE (Survey of Health, Ageing and Retirement in Europe) Wave 6 dataset to look into the socio-demographic, health, well-being, financial and work--related predictors of intended early retirement in Croatia. We estimate logit regression models. Based on our research, early retirement seems to be more appealing to people who work in the private sector, who have poor quality of life, who are less educated, or report poor health status. Amending the pension system in terms of making early retirement a less attractive choice is not enough. Many Croatian employees would be ready to work longer if they had better jobs, education, and health. These are the policy areas where Croatia needs large improvements.

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Illegitimate Economic Practices in Croatia: Findings from a Representative Survey of 2,000 Citizens

Cited by 8 publications

References 57 publications

Dissecting the illicit practice of wage underreporting: some evidence from Croatia

Dissecting the illicit practice of wage underreporting: some evidence from Croatia

Explaining workers’ role in illegitimate wage underreporting practice: Evidence from the European Union

Predictors of Early Retirement Intentions in Croatia

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