Measuring participation in undeclared work in Europe using survey data: A method for resolving social desirability bias

Measuring participation in undeclared work using surveys has been criticized for under-estimating the level of engagement due to social desirability bias that leads to an under-reporting of “bad” behavior. Until now, few studies have sought to quantify the amplitude of this bias in surveys of undeclared work. The aim of this paper is to fill this gap by using the most appropriate methodologies for estimating the probability of misleading responses in such surveys. Reporting data from special Eurobarometer survey no. 498 conducted in 2019 and involving 27,565 respondents in EU-27 countries and the UK, only 3.5% openly admitted to participating in undeclared work. The results of a Probit model with correction for misclassified cases (i.e., those undertaking undeclared work but declaring that they do not) reveals that nearly a quarter (23.3%) of the respondents undertaking undeclared work refused to openly admit this during the survey, due to the social desirability bias. The estimated overall proportion of undeclared workers is 17.3%. We obtained this value by correcting for both misclassification and the additional source of negative bias due to the large imbalance in the data (i.e., observations in one class are much lower than the other). The outcome of this new advanced approach in analysing undeclared work is that survey estimates can now report its size and determinants in a more accurate manner than has been previously the case.