Modeling of informal employment factors

Abstract

Introduction. The problem of reducing the level of informal employment has worsened in the last 3 years against the background of geopolitical crises. A number of experts call the growth of its volumes one of the most important risks for the Russian labor market. Goal. The paper examines the scale and features of informal employment in the Russian labor market and identifies the factors determining the choice of the informal employment sector. Materials and methods. The information base of the study was compiled by RLMS HSE data for the period 2011-2022. In order to exclude a possible bias in the results due to differences in the sectoral structure of employment in the formal and informal sectors, the sample was limited. The authors evaluated a panel logit model to determine the factors influencing the choice between the formal and informal sec-tors. Wage determinants in the informal sector are identified through the analysis of fixed and random effects panel data. Results and discussion. Based on the simulation results, it was found that the choice of the informal sector as the main place of work is strongly influenced by marital status, the importance of social protection measures, and career expectations. At the same time, the factors influencing the level of remuneration in the in-formal sector include the age of the employee, the amount of working time (in hours), and the availability of managerial experience. Conclusion. The problem of reducing the share of informal employment has a great importance both at the micro level and at the level of the whole country. It leads to low collection of taxes to budgets and insurance contributions to state extra-budgetary funds, and to an increase in the number of cases of violation of workers’ labor rights, especially in terms of pay and labor protection.

Keywords

• informal employment
• panel data
• fixed effects
• random effects
• logit model
• rlms hse