Determinants of Undeclared Work in the EU Member States

Abstract

In the context of European economic recovery, undeclared work has become a true challenge for the labour market policies, mainly because it affects tax revenue, social security and labour standards. Without better understanding of the main determinants of undeclared work, little can be done to prevent it. Having these in mind and based on the Eurobarometer survey, the paper aims to find the main factors that trigger undeclared work. Our findings suggest that after the economic crisis, the trust in national authorities has dropped and generated more undeclared payments, especially for the case of small and medium firms.