ABSTRACT
This chapter aims to analyze the relationship between labour market institutions and the level of informality for Central and Eastern European Countries, identifies main drivers to informal sector and which labour market regulations could significantly determine the moving from informal economy to formal economy. It presents a brief description of the most relevant results in the literature regarding the relationship between labour market institutions and informality. While active labour market programmes (LMP) increased most likely the employability of the participants, contributing to the decline of undeclared work activities, the passive LMP are seen mainly as an incentive of working in the unofficial sector and simultaneously receiving unemployment benefits. Analyzing the variations in labour market institutions across Central and Eastern European countries, Czech Republic has the smallest proportion of the minimum wage reported to average earnings, while Slovenia is situated on the opposite side.
