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Private Sector and Labour Market Developments in Albania: Formal versus Informal

Author

Listed:
  • Genti Hashorva
  • Erjon Luci
  • Marta Muco
  • Peter Sanfey

Abstract

This paper examines the structure of the formal and informal sectors in Albania. The paper outlines the size and development of the formal private sector in Albania, and assesses the obstacles faced by businesses, especially in the SME sector, and how these have changed in recent years. Although the business climate appears to have improved since 1999, Albanian enterprises still face a variety of difficulties, which act as an inducement to operate in the informal sector instead. We attempt to estimate the size of the informal sector, using a variety of methods. None of them provides a very reliable method of estimation, but the results confirm previous work that shows that the informal sector accounts for between 30 and 60 per cent of official GDP. We also show that there is a significant gap between registered unemployment and the number of unemployed based on labour force surveys. Part of this gap is due to large-scale emigration flows.

Suggested Citation

  • Genti Hashorva & Erjon Luci & Marta Muco & Peter Sanfey, 2004. "Private Sector and Labour Market Developments in Albania: Formal versus Informal," wiiw Balkan Observatory Working Papers 39, The Vienna Institute for International Economic Studies, wiiw.
    • Handle: RePEc:wii:bpaper:039
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    References listed on IDEAS

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    1. Philip Cagan, 1958. "The Demand for Currency Relative to Total Money Supply," NBER Chapters, in: The Demand for Currency Relative to Total Money Supply, pages 1-37, National Bureau of Economic Research, Inc.
    2. Mária Lackó, 2000. "Hidden Economy – an Unknown Quantity? Comparative Analysis of Hidden Economies in Transition Countries, 1989–95," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 8(1), pages 117-149, March.
    3. Muco, Marta & Papapanagos, Harry & Sanfey, Peter, 1999. "The Determinants of Official and Free-Market Exchange Rates in Albania during Transition," Journal of Comparative Economics, Elsevier, vol. 27(3), pages 534-552, September.
    4. Dominik H. Enste & Friedrich Schneider, 2000. "Shadow Economies: Size, Causes, and Consequences," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 77-114, March.
    5. Elida Çuka & Harry Papapanagos & Natasha Polo & Peter Sanfey, 2003. "Labor Market Developments in Albania: An Analytical Overview," Review of Development Economics, Wiley Blackwell, vol. 7(2), pages 217-227, May.
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    Cited by:

    1. Causevic, Senija & Lynch, Paul, 2013. "Political (in)stability and its influence on tourism development," Tourism Management, Elsevier, vol. 34(C), pages 145-157.
    2. Merita Boka & Giuseppe Torluccio, 2013. "Informal Economy in Albania," Academic Journal of Interdisciplinary Studies, Richtmann Publishing Ltd, vol. 2, October.
    3. Erjon Luci & Marta Muco & Elvira Sojli, 2006. "Euroisation in Albania: From Spontaneous to Consensual," wiiw Balkan Observatory Working Papers 71, The Vienna Institute for International Economic Studies, wiiw.
    4. World Bank, 2007. "Albania Urban Sector Review," World Bank Publications - Reports 19622, The World Bank Group.

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