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

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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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