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

Abstract

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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“…She described these as windows of opportunity within the structures of the economy, where small firms can exploit the residual productive opportunities left by larger firms, albeit these are vulnerable to the decisions of these large firms. Rather than leftover spaces in the marketplace, from a post-growth perspective, we view these 'interstices' as worthy spaces for further interrogation, particularly those niches that promote a different market logic: a 'more-than-capital' logic [50,53]. These small firms residing within resilient 'interstices' can challenge the dominant industrialised complex, providing alternative ways of doing business and providing a path to a post-growth economy [28].…”

“…These small firms residing within resilient 'interstices' can challenge the dominant industrialised complex, providing alternative ways of doing business and providing a path to a post-growth economy [28]. The challenge to addressing a sustainable food system is daunting, especially a vision that challenges a capitalist paradigm, but by researching the markets that are taking on that challenge, insights can be gained on the mechanisms that keep these diverse economies going [50,53].…”

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“…Chang, 2020). In contrast, low tax morality was found to increase the likelihood of involvement in the informal economy (Horodnic et al, 2022). Tax morality is primarily related to intrinsic motivation (Cummings et al, 2009;Frey, 1992;Taing and Chang, 2020).…”

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