Explaining the supply of home repair and renovation services in the undeclared economy: lessons from Europe

Three competing theories have been used to explain participation in the undeclared economy. A structuralist perspective asserts that workers are pushed into undeclared work because of their “exclusion” from the declared economy. Two alternative theoretical perspectives assert that undeclared operators voluntarily “exit” the declared economy. Neo-liberals depict undeclared workers as rational economic actors and institutional theorists represent them more as social actors who disagree with the formal rules. To evaluate these competing theories in relation to the supply of undeclared home repair and renovation services, data are reported from a 2019 Eurobarometer survey involving 27,565 face-to-face interviews in 28 European countries. The finding is that 9.4% did so solely due to their exclusion from declared work. 19.8% participated purely for reasons associated with the rational economic actor perspective and 28.6% only for motives associated with the social actor perspective. 42.2% did so for a mixture of motives. Using probit regression analysis, the characteristics of those supplying undeclared home repair and renovation services and doing so for each rationale are revealed. The theoretical outcome is a call to view these perspectives not as competing but complementary. The policy outcome is to reveal the different policy initiatives required to tackle each of the rationales for supplying undeclared home repair and renovation services.