ABSTRACT
This chapter discusses the issues surrounding tax evasion and non-compliance stemming from undeclared work in the case of Romania, which is considered to be one of the European Union (EU) countries in which the phenomenon is the most prevalent. The grey economy is considered a structural feature of EU, so much so that it has become an important item on the EU agenda. Romania acceded to the European Union in 2007, and in theory EU membership meant a boost to formal institutions in a bid to attain administrative harmonization and economic integration. Romania has a strong cultural tradition in which rejection of authority, lack of social trust, simulated compliance and a drive towards social conformity are interwoven in a very intricate pattern of social norms. The chapter explains the phenomenon of social contagion most likely responsible for the growth of non-compliance with the help of Agent-Based Model.
