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Unreported Employment and Envelope Wages in Mid-Transition: Comparing Developments and Causes in the Baltic Countries

Author

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  • Jaanika Meriküll

    () (Faculty of Economics and Business Administration, University of Tartu, Narva 4, Tartu 51009, Estonia.)

  • Karsten Staehr

    ([1] Tallinn School of Economics and Business Administration, Tallinn University of Technology, Estonia[2] Research Department, Bank of Estonia, Estonia)

Abstract

This paper compares the prevalence and determinants of unreported employment in the three Baltic countries in 1998 and 2002 using a hitherto little used data set. The prevalence of unreported employment varies substantially across the three countries and across the two sampling years. Microeconometric estimations show that firm-related characteristics, such as sectoral activity, firm size and employment changes, are important determinants of unreported employment in all three countries. The impact of socio-demographic factors, such as gender, age and education, is generally less important and varies across countries and time. Only a small part of the changes in unreported employment between 1998 and 2002 can be accounted for by changes in firm-specific factors and socio-demographic characteristics. Exploratory calculations suggest that the gain for individuals undertaking unreported employment is modest or non-existent, in particular among individuals who engage regularly in such activities. This suggests that the many of the recipients of envelope wages may have few alternatives to accepting unreported employment.

Suggested Citation

  • Jaanika Meriküll & Karsten Staehr, 2010. "Unreported Employment and Envelope Wages in Mid-Transition: Comparing Developments and Causes in the Baltic Countries," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 52(4), pages 637-670, December.
  • Handle: RePEc:pal:compes:v:52:y:2010:i:4:p:637-670
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    Cited by:

    1. Colin C. Williams & Ioana A. Horodnic, 2015. "Explaining and tackling the shadow economy in Estonia, Latvia and Lithuania: a tax morale approach," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 15(2), pages 81-98.
    2. Paulus, Alari, 2015. "Tax evasion and measurement error: An econometric analysis of survey data linked with tax records," ISER Working Paper Series 2015-10, Institute for Social and Economic Research.
    3. repec:jes:journl:y:2017:v:8:p:5-28 is not listed on IDEAS
    4. Dotti Nicola Francesco & Van Heur Bas & Williams Colin C., 2015. "Mapping the Shadow Economy: Spatial Variations in the use of High Denomination Bank Notes in Brussels," European Spatial Research and Policy, De Gruyter Open, vol. 22(1), pages 5-21, June.
    5. Colin C. Williams, 2014. "Confronting the Shadow Economy," Books, Edward Elgar Publishing, number 15370, April.
    6. Merike Kukk & Karsten Staehr, 2014. "Income underreporting by households with business income: evidence from Estonia," Post-Communist Economies, Taylor & Francis Journals, vol. 26(2), pages 257-276, June.
    7. Jaanika Merikull & Tairi Room & Karsten Staehr, 2013. "Perceptions of unreported economic activities in Baltic Firms. Individualistic and non-individualistic motives," Bank of Estonia Working Papers wp2012-8, Bank of Estonia, revised 04 Feb 2013.
    8. Elek, Peter & Köllő, János, 2017. "Eliciting Permanent and Transitory Undeclared Work from Matched Administrative and Survey Data," IZA Discussion Papers 10800, Institute for the Study of Labor (IZA).
    9. Colin C. Williams & Friedrich Schneider, 2016. "Measuring the Global Shadow Economy," Books, Edward Elgar Publishing, number 16551, April.
    10. repec:ris:utmsje:0218 is not listed on IDEAS
    11. Williams Colin C., 2014. "Explaining Cross-National Variations in the Prevalence and Character of Undeclared Employment in the European Union," European Spatial Research and Policy, De Gruyter Open, vol. 21(2), pages 115-131, December.
    12. Elek, Peter & Köllő, János & Reizer, Balázs & Szabó, Péter A., 2011. "Detecting Wage Under-reporting Using a Double Hurdle Model," IZA Discussion Papers 6224, Institute for the Study of Labor (IZA).
    13. Williams Colin C. & Horodnic Ioana A., 2015. "Explaining The Prevalence Of The Informal Economy In The Baltics: An Institutional Asymmetry Perspective," European Spatial Research and Policy, De Gruyter Open, vol. 22(2), pages 127-145, December.
    14. Fedotenkov, Igor & Schneider, Friedrich, 2017. "Military expenditures and shadow economy in the Baltic States: Is there a link?," MPRA Paper 76194, University Library of Munich, Germany.

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