Informality has been seen as a temporary solution to unemployment, but it poses important challenges for the government due to its negative impact on tax collection and welfare indicators. It is not solely a short-term problem since these individuals are expected to eventually shift to a formal job, but what if that doesn’t happen? Is informality more than an escape valve an optimal decision from evasion? What role do social perspectives play in this decision? In this study, we review with an experimental approach whether there is a relationship between informality and dishonesty from the perspective of social norms. The evidence shows that at the intensive margin, stricter social and civic norms significantly explain the dishonest behaviors of these workers, and they rationalize their unfair practices with their perceivedactions of others, which means that building strictly social and civic norms in a context of illicit behavior encourages individuals to behave aligned with their beliefs.
