Explaining and tackling the informal economy: an evaluation of competing perspectives

Williams, Colin C.

doi:10.1515/openec-2019-0007

Cited by 8 publications

(8 citation statements)

References 55 publications

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“…Other rational economic explanations include discounts, easy negotiation and the possibility of receiving presents from the seller. This is in line with Schneider and Enste [48] and Williams [19,42,43], as consumers try to gain the best price possible in their interest, and the products and services are not marketed under fiscal burdens. However, almost half of participants (seven participants) did not cite lower cost at all, and more than half of participants (nine participants) cited a reason other than lower cost when purchasing in the informal economy.…”

Section: Rational Economic Actor Perspectivesupporting

confidence: 67%

“…Most of the literature on the informal economy investigates the supply side, focusing on how many people work in the informal economy, who does so and/or the motives for working in the informal economy [7,20,[31][32][33][34][35][36][37][38][39][40][41][42][43][44][45][46][47]. Little research has investigated the demand side of the informal economy, especially on the motives for purchasing undeclared goods and services.…”

Section: Why Do Consumers Purchase From the Informal Economy?mentioning

confidence: 99%

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Exploring the Demand-Side of the Informal Economy during the COVID-19 Restrictions: Lessons from Iași, Romania

et al. 2022

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Little attention has been paid to why consumers choose to purchase goods and services from the informal economy. Similarly, few studies have been conducted on consumer behaviour in relation to informal markets during the COVID-19 pandemic. The aim of the article is to evaluate, for the first time, whether the COVID-19 pandemic influenced consumer behaviour in relation to the informal economy. Qualitative evidence collected in Iași, Romania, is reported. The finding is that the most important motives for purchasing goods and services from the informal economy are related to social ends, such as supporting local businesses, maintaining relationships with others, and enhancing sustainable development. The novel finding of this research is that community exchange in the form of mutual aid and reciprocity is not activated only for friends, neighbours, kin or work colleagues but also for local businesses facing financial difficulties. The customers are displaying solidarity and empathy for their situation. As such, this article adds to previous findings indicating that the motivation of lower cost is not the universal rationale for purchasing from the informal economy as many consumers choose to make purchases from informal market driven by social rationales. The paper ends by discussing the policy implications of the findings.

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Section: Rational Economic Actor Perspectivesupporting

confidence: 67%

Section: Why Do Consumers Purchase From the Informal Economy?mentioning

confidence: 99%

Exploring the Demand-Side of the Informal Economy during the COVID-19 Restrictions: Lessons from Iași, Romania

et al. 2022

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“…Until now, the vast majority of studies have focused upon the supply-side examining employers and workers participation in undeclared work. These studies examine the types of work conducted (ILO, 2018; Williams, 2014), the demographic and socio-economic characteristics of informal workers and businesses (ILO, 2018; OECD, 2017; Williams and Bezeredi, 2019; Williams and Yang, 2018; World Bank, 2019), and their motives for participating in undeclared work (Maloney, 2004; Shahid et al , 2019; Williams, 2019; World Bank, 2019). Much less attention has been given to the demand-side.…”

Section: Explaining the Cash-in-hand Consumer Culturementioning

confidence: 99%

Explaining the cash-in-hand consumer culture in the European home repairs and renovations sector

Williams

Kosta

2020

JFMPC

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Purpose The purpose of this paper is to explain who purchases undeclared home repairs and renovations and their motives to tackle the cash-in-hand consumer culture. The conventional view has been that undeclared home repairs and renovations are sought by those consumers needing to save money and desiring a lower price. Here, this is evaluated critically. Design/methodology/approach To do so, evidence from a 2019 Eurobarometer survey involving 27,565 face-to-face interviews in 28 European countries is reported. Findings The finding is the need for a nuanced and variegated understanding of who purchases undeclared home repairs and renovations and why. Lower price is their sole rationale in just 25% of purchases, one of several rationales in 34% of cases and not a reason in the remaining 42% of purchases. Besides a lower price, consumers purchase undeclared not only unintentionally but also to circumvent the failings of formal sector provision in terms of its availability, speed and quality, as well as for social and redistributive rationales. Practical implications To reduce the cash-in-hand consumer culture, not only are incentives needed to persuade consumers to purchase declared along with awareness-raising campaigns about the benefits of purchasing declared services but initiatives are also needed to improve the availability, speed, reliability and quality of formal provision and to address undeclared purchases conducted for social and redistributive purposes. Originality/value This paper improves understanding of how governments can stop consumers asking “how much for cash” and reduce demand for undeclared home repair and renovation services.

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“…(Schneider and Enste, 2000;Williams, 2008). As such, from the consumer perspective, each transaction implies a quick evaluation of the cost/benefit ratio and if the gain for the customer is higher in the informal market, where the transaction is not subject to fiscal burdens (i.e., VAT or income tax), then the decision is made in favor of informal market purchase (Williams, 2017(Williams, , 2019.…”

Section: Rational Economic Actor Theoretical Perspectivementioning

confidence: 99%

Who Purchases From the Informal Economy and Why?

et al. 2022

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In recent decades scholars have acknowledged that transactions in the informal economy have not vanished with modernization and industrialization as expected but rather remain an important contemporary aspect of overall production and consumption across the world, in both developing and developed countries. Yet little is known about the profile of the consumers in this realm or what drives them to purchase from the informal economy. A systematic review of the literature investigating consumption in the informal economy reveals a severely underdeveloped area of consumer studies with significant gaps in terms of its theoretical approaches, methods and regional coverage. The findings of the existing literature is that multiple motives are used by consumers for justifying their purchases in the informal economy beyond the dominant simplistic view that they do simply for financial gain or for a lower price (namely, it identifies social ends and failures in formal market provision in terms of availability, speed of provision and quality). The outcome is a recognition that responsibility to reducing this phenomenon with negative effects on governments, businesses, workers and consumers lies not just with public authorities but also practitioners who need to correct the failures in formal market provision. The significant gaps identified in the literature are then used to highlight a comprehensive future research agenda, which includes the need for the development of an institutionalist theoretical perspective when explaining consumers‘ participation in the informal economy and social marketing interventions.

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Explaining and tackling the informal economy: an evaluation of competing perspectives

Cited by 8 publications

References 55 publications

Exploring the Demand-Side of the Informal Economy during the COVID-19 Restrictions: Lessons from Iași, Romania

Exploring the Demand-Side of the Informal Economy during the COVID-19 Restrictions: Lessons from Iași, Romania

Explaining the cash-in-hand consumer culture in the European home repairs and renovations sector

Who Purchases From the Informal Economy and Why?

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