This paper takes a free-market approach to the idea of welfare. That is, the analysis does not reject the role of the welfare state to fight against poverty and inequality but underlines the perils of the welfare mentality’s proliferation. Sustainable development requires more individual responsibility and less dependence on the state and its redistribution function. The aim of this paper is twofold. Firstly, it aims at showing that welfare mentality imposes challenges on sustainable development. The second aim is to identify the factors associated with welfare mentality. We use data from several international databases and apply correlation, principal components, and multiple regression analyses on a sample of 28 European countries. The results of our study show that welfare mentality negatively influences sustainable development by being positively correlated with the risk of poverty and the percentage of young people not in employment, education, or training (NEET). At the same time, countries such as Sweden, Denmark, and Luxembourg, widely acknowledged as welfare policy heavens, register low values in terms of preference for redistribution. The main determinants of welfare mentality are found to be a high level of NEET and a low level of economic freedom. This result points to the role of youth inclusion and free-market institutions in diminishing people’s welfare expectations and encouraging them to take better control of their own lives to reach prosperity and not depending on state support.

Crises, such as the current pandemic, and the measures meant to tackle with them tend to increase the presence of the informal sector in the official economy, affecting mostly the emerging and developing economies. This situation is characteristic for the eleven CEE countries. These also display certain weaknesses at the economic and institutional level, which increase their vulnerability in times of crisis, with a real danger for the informal economy to grow.This paper aims to investigate the role of the institutional framework in explaining shadow economy in the mentioned countries. The methodological approach consists in a panel analysis using data from the 1996-2017 period and a principal component analysis meant to identify the specificities of each country. Our results demonstrate the influence of both formal and informal institutions on the shadow economy while country-level particularities show that institutional factors act differently in different socio-economic and political environments; consequently, the measures aimed to limit shadow economy should be adapted to each country’s specific context.