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The Effects of the Informal Sector on Income of the Poor in Russia

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  • Yuriy Timofeyev

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Abstract

This paper clarifies the social and economic effects of employment in the informal sector on the poor in Russia in recent years. The article describes the extent to which the figures for informal sector at large and unofficial employment in particular vary in different estimates and the effect they have on the average labor income of the poor. The major impact of the research consists of the development of a universal method for the estimation of the scales of labor income of the poor in the informal sector. Using the latest available data from Russian Federal State Statistics Service, this indicator is calculated for the poor and than compared with average wages in the formal sector and the subsistence minimum (official poverty line). The study concludes that the informal sector is a factor of social stability in a postsocialist transition economy, which, however, cannot alleviate poverty. Copyright Springer Science+Business Media B.V. 2013

Suggested Citation

  • Yuriy Timofeyev, 2013. "The Effects of the Informal Sector on Income of the Poor in Russia," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 111(3), pages 855-866, May.
  • Handle: RePEc:spr:soinre:v:111:y:2013:i:3:p:855-866
    DOI: 10.1007/s11205-012-0037-5
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    File URL: http://hdl.handle.net/10.1007/s11205-012-0037-5
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    References listed on IDEAS

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    1. Simon Johnson & Daniel Kaufman & Andrei Shleifer, 1997. "The Unofficial Economy in Transition," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(2), pages 159-240.
    2. Irina Merkuryeva, 2006. "Informal Employment in Russia: Combining Disadvantages and Opportunities," CERT Discussion Papers 0606, Centre for Economic Reform and Transformation, Heriot Watt University.
    3. I. Maslova & T. Baranenkova, 2004. "Informal Employment in Russia," Problems of Economic Transition, Taylor & Francis Journals, vol. 47(8), pages 59-72.
    4. Nikopour, Hesam & Shah Habibullah, Muzafar, 2010. "Shadow Economy and Poverty," MPRA Paper 23599, University Library of Munich, Germany.
    5. Kaufmann, Daniel & Kaliberda, Aleksander, 1996. "Integrating the unofficial economy into the dynamics of post-socialist economies : a framework of analysis and evidence," Policy Research Working Paper Series 1691, The World Bank.
    6. Maloney, William F., 2004. "Informality Revisited," World Development, Elsevier, vol. 32(7), pages 1159-1178, July.
    7. Bourguignon, Francois, 1979. "Decomposable Income Inequality Measures," Econometrica, Econometric Society, vol. 47(4), pages 901-920, July.
    8. Anderson,James, 1998. "The size, origins, and character of Mongolia's informal sector during the transition," Policy Research Working Paper Series 1916, The World Bank.
    9. Dimova, Ralitza & Gang, Ira N. & Landon-Lane, John, 2005. "The Informal Sector During Crisis and Transition," WIDER Working Paper Series 018, World Institute for Development Economic Research (UNU-WIDER).
    10. Lemieux, Thomas & Fortin, Bernard & Frechette, Pierre, 1994. "The Effect of Taxes on Labor Supply in the Underground Economy," American Economic Review, American Economic Association, vol. 84(1), pages 231-254, March.
    11. Anders ├ůslund & Peter Boone & Simon Johnson, 1996. "How to Stabilize: Lessons from Post-communist Countries," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 27(1), pages 217-314.
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    More about this item

    Keywords

    Informal Sector; Labor income of the poor; Russia; C23; I26; I3; O17; P36;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • P36 - Economic Systems - - Socialist Institutions and Their Transitions - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty

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