CELSI's Kahanec and Guzi Present their Labor Supply Study at 2023 SASE Congress in Rio
Published on July 22, 2023
Martin Kahanec presents a joint study with Martin Guzi titled "The Impact of the Covid-19- and Energy-Related Price Hikes on Undeclared Work around the World at the 2023 Society for the Advancement of Socio-Economics' Annual Conference "Socio-Economics in a Transitioning World" in Rio de Janeiro on July 20-22, 2023.
The Covid-19 pandemic and the energy crisis of the early 2020s have resulted in significant price hikes around the globe. Although consumers can mitigate some of these price hikes by adjusting their consumer baskets, low-income groups may be more constrained to do so as their consumer baskets contain larger shares of necessities. It turns out, in fact, that their costs of living increased more steeply than those of the other income groups, as the recent price increases were more profound in the categories of goods that constitute relatively large shares of consumer baskets of low-income groups. Such price hikes may increase labor supply on the fringes of the labor market, as especially low-income households may need to compensate for the decreased purchasing power of their nominal income by seeking additional employment out of necessity. In addition, price hikes on the input side increase the costs of production, possibly pushing employers and employees into undeclared work, or employers into layoffs or bankruptcies. Using a unique database of Living Wages in this article we study the impact of the recent price hikes on the prevalence of undeclared around the world. This paper sheds light on some of the key drivers of undeclared work and informs the policy debate on tackling undeclared work globally.