Tackling Undeclared Work in Bulgaria: Knowledge-Informed Policy Responses

Undeclared work is socially accepted and widely practiced in Bulgaria. The undeclared economy is estimated at roughly a third of GDP. Nearly one in ten people do some undeclared work. Undeclared work is motivated primarily by lack of trust between the people and the authorities. It involves mostly people who voluntarily exit the declared economy but also those that are excluded. The conventional repressive approach to tackling undeclared work has exhausted its effects in Bulgaria. It should be complemented with more curative, preventative and commitment policies. Policymakers should consider not just the rational but also the social actor approach which tackles trust issues and the asymmetry between formal and informal rules. Authorities should continue modernising institutions and should increase social spending and public awareness campaigns.