Social embeddedness, formal labor supply, and participation in informal work

Purpose: The purpose of this paper is to analyze data from the first-ever national-level study of informal work in the USA to test two prominent points of focus in the literature: how participation in informal work relates to social embeddedness and formal labor supply. This paper also provides a comparative test of the factors associated with exchange-based informal work (i.e. money/barter) vs self-provisioning activities. Design/methodology/approach: The study draws on data from a national-level household telephone survey and uses descriptive statistics and logistic regression models. Findings: The data show that participation in the informal economy is widespread in the USA. Consistent with theory, it is found that measures of social embeddedness and formal labor supply are much more salient for predicting participation in informal work for money/barter compared to self-provisioning. Originality/value: Drawing on unique data from the first national-level household survey of informal work in the USA, this study provides generalizable support for the contention that the informal sector stands as a persistent structural feature in modern society. The results build on the wealth of information produced by qualitative case studies examining informal economic activity as well as a smaller number of regionally targeted surveys to provide important theoretical insights.