Determinants of the Household Demand for Services in Poland

This paper addresses the issue of household demand for services in Poland when the informal sector is taken into consideration. The aim of the study is to investigate the factors influencing household expenditures on services; identify the determinants of household tax strategy (the choice between acquiring services on the regular labor market or not); and investigate the differences between the factors influencing expenditures on formal versus informal services. An important novel feature of this research is the inclusion of variables that capture social norms and personal attitudes towards tax evasion. The study concludes that expenditures on services are positively related to the financial situation of the household, the education level of household members, and the age of the household head. The probability of avoiding taxes is higher in households with lower incomes, households with more than one member, and in those in which a positive attitude toward informal employment is expressed .