Objective: Quantify and analyse how labour market institutions (e.g., minimum wage, unemployment benefits) influence informality in Romania’s economy, combining both micro and macroeconomic approaches.

Methodology: Employed structural equation models, econometric techniques, and Granger causality tests on national and EU panel data (2000–2015) to assess institutional impacts on informal labour practices.

Key Findings: Established a direct causal relationship between minimum wage increases and informal employment; demonstrated how labour market rigidity and tax burdens drive informal economy growth.

Policy Implications: Provided evidence-based recommendations to mitigate informality, focusing on optimized wage regulations, improved compliance mechanisms, and enhanced support for low-skilled workers.

Project Manager: Davidescu Adriana Anamaria

Period: March 2016–December 2017

Beneficiary: Ministry of Research, Innovation and Digitalization (Core Program)

Key Results:

• Size of Informal Economy: Created a quarterly time series for Romania’s informal economy as a percentage of GDP, revealing fluctuations tied to labour policy changes and economic conditions.
• Impact of Minimum Wage: Identified a positive association between minimum wage hikes and informal labour, particularly affecting low-skilled and young workers.
• Unemployment Benefits: Demonstrated that inadequate safety nets lead to increased informality as workers seek alternative income sources.
• Sector-Specific Findings: Informal labour is highest in sectors with irregular hours and limited contract enforcement, such as construction and agriculture.
• Economic Implications: Highlighted the effects of informality on tax revenue, labour force participation, and social policy; emphasised the need for targeted fiscal and labour reforms to reduce undeclared work