Why is Informal Employment Too Difficult to Control? Further Evidence from Cultural Perspective

Abstract

Much of the literature on informal employment examines the impact of tangible benefits such as earnings. Little attention has focused on the impact of non-pecuniary benefits on informality. The article has initially applied some of Schwartz’s cultural indices, which include autonomy and embeddedness as a proxy for the desire to be independent, and hypothesizes that such cultural perspective have a substantial influence on informal employment. Using many empirical approaches, the results show that embeddedness has a large, negative, significant effect on informal employment, while an increase in the level of intellectual autonomy results in a great expansion in informal employment. JEL: A14, J46, O17