Abstract

In Italy, informal work is spread out not only across poorer regions of the South, but also within richer areas of the North. However, specifically within the South, statistical analysis shows ambiguous effects of social expenditure on informal work. Path dependently rationed social spending, lower "per capita" income, significant poverty rate, and stagnating female labor force participation have a bearing on the growing share of informal work. This typically characterizes a poverty trap condition, warning against across the board increase in social spending for social policy reform.