Evaluating the relationship between social exclusion and participation in the informal sector in the European Union

Purpose This paper evaluates who engages in informal work. The intention in doing so is to analyse whether important causal factors of social exclusion such as age, education, gender and employment status, influence participation in informal work in the European Union.

Methodology To do this, a 2013 Eurobarometer survey of who participates in undeclared work in 28 European member states is reported.

Findings Using multilevel mixed-effects logistic regression analysis, the finding is that although some marginalised groups (the unemployed, those having difficulties paying their household bills, the working class and younger age groups) are significantly more likely to participate in the informal sector, others are not (those with less formal education and living in rural areas) and yet others (women and people in deprived European regions) are significantly less likely to participate.

Research implications The outcome is a call for a nuanced and variegated understanding of the relationship between participation in the informal sector and social exclusion.

Practical implications These results display the specific populations that need targeting when seeking to tackle informal work, revealing for example that the current the allocation of European funds for tackling informal work in poorer EU regions is mistaken, but that the targeting of the unemployed is not and current policy initiatives such as smoothing the transition from unemployment to self-employment worthwhile.

Originality/value This is the first extensive evaluation of the relationship between participation in the informal sector and social exclusion at the level of the European Union