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To explain the prevalence and persistence of informal economic activity globally, scholars have recently advanced an institutional incongruence perspective. Institutional incongruence exists where there is a misalignment between what is considered legitimate by a society's formal institutions (e.g. its laws and regulations) and its informal institutions (e.g. norms, values and beliefs). Reporting findings from a series of qualitative focus groups in Bulgaria, Croatia and the Former Yugoslav Republic of Macedonia, this article explores relationships between such institutional incongruence and informal economic activity. In particular, it sheds light on how informality and institutional incongruence are experienced by individuals in South-East Europe. It furthermore provides insights on the causes of such incongruence, and how it can lead to informal economic activity. Finally, it reports on individuals' perceptions towards different measures to tackle institutional incongruence and informal economic activity, with implications for policymakers in South-East Europe and more widely. [ABSTRACT FROM AUTHOR]

The article discusses informal economy and unemployment in Croatia. The author advances that the country's socio-economic and political changes during the 1990s did not have much impact on informal work practices among ordinary Croatians. It discusses its increased unemployment during the 1990s as a result of privatization, informal economy as a survival strategy for the unemployed, particularly in the construction industry, and women entering the job market to compensate for their husbands' low salaries.