Individual supply of undeclared work: a microeconometric approach.

Summary Illegal work has an astonishing capacity to cross centuries and borders. It is therefore difficult to discern its causes. We propose three lines of research. Theoretically, our objective is to develop models of the supply of black labor that take into account the official market. At the econometric level, the estimation of these models aims at removing some theoretical ambiguities and testing the validity of standard hypotheses. The first focus is on the determinants of black market participation and intensity. We introduce fixed costs of entering the black market and attest to their magnitude. Although they are lower than in the official market, they account for almost one-third of the potential income of non-participants. The second axis concerns taxation and enforcement. Our structural model endogenizes the subjective variables of probability of detection and fines. Our results reveal the importance of network effects and the absence of wage discrimination against women in the black market. The assumptions of perfect substitutability of hours and additive separability of the utility function are rejected. The third axis studies the impact of psychological and social norms on moonlighting. Our results show that younger people are more sensitive to the threat of ostracism. In contrast, women pay little attention to moral considerations. The absence of fraud among them results in the fear of financial sanctions. Finally, working hours, even in the absence of black market uncertainty, are imperfect substitutes.