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Informal pay gaps in good and bad times: Evidence from Russia

Author

Listed:
  • Olivier Bargain

    (GREThA - Groupe de Recherche en Economie Théorique et Appliquée - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique)

  • Audrey Etienne

    (LERN - Laboratoire d'Economie Rouen Normandie - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université - IRIHS - Institut de Recherche Interdisciplinaire Homme et Société - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université)

  • Blaise Melly

Abstract

Informal work is traditionally large in Russia and has further increased in the recent years. We explore the implications of this shift in terms of wage dynamics. Our characterization is based on the estimation of informal pay gaps at the mean and along the wage distribution, relying on the Russian Longitudinal Monitoring Survey for 2003–2017. Our approach comprises three original features: we rely on unconditional quantile effects of informality, we incorporate quantile-specific fixed effects using a tractable approach, and we suggest a treatment of the incidental parameter bias. Over the whole period, informal wage penalties are relatively small and do not suggest heavily segmented labor markets, even at low wage levels. Yet, in the past decade, a substantial negative selection into informal employment and self-employment has taken place, on average and especially at low earnings. Economic downturns and labor market policies have likely contributed to the shakeout of less productive workers in the formal sector, making the low-tier informal sector more of a last resort.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Olivier Bargain & Audrey Etienne & Blaise Melly, 2021. "Informal pay gaps in good and bad times: Evidence from Russia," Post-Print hal-04817643, HAL.
    • Handle: RePEc:hal:journl:hal-04817643
    DOI: 10.1016/j.jce.2021.02.002
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    Cited by:

    1. Malkova, Alina & Peter, Klara, 2025. "The journey to formality: How credit market access shapes informal workers' choices," Journal of Comparative Economics, Elsevier, vol. 53(3), pages 683-703.
    2. Musayir, Arlan & Arabsheibani, Reza, 2025. "Motherhood and Informality: Empirical Evidence from Russia," IZA Discussion Papers 17916, Institute of Labor Economics (IZA).

    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General

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