In this paper we focus our research on Russia and Ukraine, where the official GDP sharply drop between 1991 and 1999. We have there the following apparent paradox: a large GDP decrease (around 50%) and relative employment stability (-13 %). By presenting our estimations of informal (unofficial) GDP we discuss the extent and the nature of the fall in production. We estimate the informal sector between 25 and 35 % of total GDP in Russia and 30 to 50 % in Ukraine. We use different indirect macroeconomic methods in order to measure the shadow economy: essentially macro-electric and monetary (cash-deposit ratio). Since 1991, the share of unofficial GDP in the total GDP has been multiplied by 2 or 3. These results provide part of the explanation of the GDP-employment paradox. Since the Plan disappeared the informal sector partly replaced the formal one, so the official GDP fall should be reconsidered.
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Paper provided by DELTA (Ecole normale supérieure) in its series DELTA Working Papers with number
2000-19.