Explaining employers' illicit envelope wage payments in the EU‐27: a product of over‐regulation or under‐regulation?

The aim of this paper is to evaluate the prevalence in the 27 member states of the European Union of a little discussed illicit wage arrangement in which formal employees are paid two wages by their formal employers – an official declared salary and an additional undeclared wage, thus allowing employers to evade their full social insurance and tax liabilities. Reporting the results of a 2007 Eurobarometer survey involving 26,659 face‐to‐face interviews, the finding is that one in 18 formal employees received such an envelope wage from their formal employer and that envelope wage payments are more prevalent in member states with lower (rather than higher) levels of state intervention. The tentative conclusion is that illicit envelope wage payments are a product of under‐regulation, rather than over‐regulation, and that further research is now required to test the validity analysis of this thesis in other global regions.     

Evaluating cross‐national variations in the extent and nature of informal employment in the European Union

This article evaluates critically the contrasting explanations for the cross‐national variations in the prevalence and nature of informal employment, which variously view such work as more prevalent in poorer, under‐developed economies; driven by high taxes, corruption and state interference that lead workers to exit formal employment; or driven by inadequate state intervention leading to the exclusion of workers from formal employment and state welfare provision. By analysing cross‐national variations across the European Union in the size of informal employment using indirect measurement methods and in its varying character using evidence from a 2007 Eurobarometer survey, it was found that wealthier, less corrupt and more equal economies with higher levels of labour market intervention, social protection and redistribution via social transfers have lower levels of informal employment, much of which is conducted to exit formal employment. The paper concludes by exploring the theoretical and policy implications.     

Evaluating the effect of soft business support upon small firm performance

The paper applies robust econometric techniques to assess theimpact of publicly-provided subsidised ‘soft’ businesssupport on the performance of small and medium-sized enterprises(SMEs). It considers the assistance for consultancy advice providedtowards marketing under the UK Enterprise Initiative, lookingat its effect on sales turnover, employment and survival, andmaking explicit allowance for selection effects. It is foundthat the policy has no impact on the survival of smaller SMEs,and that it is most effective in the mid-range SMEs, where itraises survival rates by about 4% over the longer run and growthrates in surviving firms by up to 10% per annum. Overall, thescheme has a substantial impact, but the paper draws attentionto the possible displacement effects.     

Indonesian Agricultural Development: The Awkward Case of Smallholder Tree Crops 1

The problems of transforming smallholder tree crops from traditional low-yielding to modern high-yielding technology are examined, using a meta production function approach to analyse the changes. The role of government in transformation is considered, and various ‘individual’ and ‘black’ improvement schemes implemented since the 1950s are analysed. Many of these schemes have not teen successful owing to poor planning and inadequate managerial and financial support, and their coverage has been small in relation to the huge areas needing improvement. The paper suggests a more modest ‘dispasal’ approach to transformation, concerned with setting up nurseries to provide better quality planting material and advice to individual fanners. But even this revised approach should be carefully planned and executed light of previous mistakes if it is to have widespread impact.