Beyond competing theories of the hidden economy

Abstract

PurposeThis paper aims to evaluate critically the validity of rival theorisations of the hidden economy that variously read this sphere as a leftover from a previous era, a by‐product of a new emergent form of capitalism, a complement to formal employment or an alternative to the formal economy. Until now, the common tendency among economic theorists has been to either universally privilege one theorisation over others, or to represent each theory as valid in different places.Design/methodology/approachTo evaluate their validity to the city of Moscow, a survey is reported involving 313 face‐to‐face interviews with inhabitants conducted during 2005/2006.FindingsThe finding is that, although each theory is a valid representation of particular types of hidden work in Moscow, no one theory fully captures the diverse nature of the hidden economy in this city, and that only by combining all of them can a finer‐grained understanding of the multifarious character of the hidden economy in this city be achieved. How these theories can be synthesised in order to develop this fuller and more nuanced understanding of the hidden economy is then outlined.Research limitations/implicationsThis study reveals that all these theories are needed to more fully understand the hidden economy of Moscow. Whether this is similarly the case elsewhere now needs to be investigated.Practical implicationsThe recognition of multifarious types of hidden work, each with different economic implications, reveals that different policy approaches are perhaps required towards various forms of hidden work.Originality/valueThe paper re‐theorises the hidden economy as a sphere composed of heterogeneous types of work.