UNDERSTANDING THE INFORMAL ECONOMY IN PRACTICE – EVIDENCE FROM BOSNIA AND HERZEGOVINA
Journal Title: e-Finanse - Year 2018, Vol 14, Issue 4
Abstract
This paper provides insights into the informal economy of Bosnia and Herzegovina (BiH), a post-conflict transition economy in the Western Balkan region aspiring to became part of the European Union. After the introductory section and literature review, we introduce the economic outlook of BiH and then provide evidence estimating the size of the informal economy, which is identified to be around 30% over the last couple of years. As the size of the informal economy is high and persistent, this implies that current policy approaches are not efficient in tackling this economic challenge. To understand how the informal economy operates in practice, we use data from two different surveys to assess tax morality, undeclared work and the structure of the participants in the informal economy. In the next section, we supplement the study with ethnographic insights. In particular, we identify how participants in the informal economy use it for different purposes and with different motives. This includes reliance on the informal economy as a survival strategy for households, as a way to supplement insufficient formal income, to compensate for economic insecurity, or to decrease costs of formal business by using “envelope wage” practices, but equally importantly to overcome formal institutional rigidities linked to current contradictory laws.
Authors and Affiliations
Nirha Efendic, Edin Pasovic, Adnan Efendic
Keywords
Related Articles
- EP ID EP493961
- DOI 10.2478/fiqf-2018-0029
- Views 69
- Downloads 0
Financialization of the economy and the need for personal finance advisory services
Financialization of households is a result of the growing role of financial systems and instruments in the economy. The increased role of financial phenomena in financial and non-financial decisions taken by households i...
Selection and assortment of the variables describing the relationship between the economy and the general government sector size by application of the LEM2 algorithm
This paper reverses the relatively frequent examined interrelation that links an impact of the public sector (and within it the general government sector) on the economy of the analyzed countries. The article analyses wh...
IS IT WORTH BEING GOOD? – THE EFFICIENCY AND RISK OF SOCIALLY RESPONSIBLE INVESTING IN LIGHT OF VARIOUS EMPIRICAL STUDIES
The paper discusses the issue of the effects of using SRI strategies on performance and risk of investment portfolios. During the research procedure, a number of goals were executed which is reflected by the article’s st...
CORPORATE BOND MARKET OF REAL ESTATE DEVELOPMENT COMPANIES IN POLAND
The aim of the article examines the features that determine the attractivenessof bonds as a financing instrument for real estate development projects in Poland, and the share of debt securities and bonds in the financing...
Financialisation as a result of the network economy\'s development
In the last thirty years, the world’s economies have changed significantly. New technology developments have enabled the transition from the industrial economy to the network economy. The network economy is based on info...