Discussion Paper Details

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Title: Labour Supply in the Informal Economy in Russia during Transition

Author(s): Alexandre Kolev

Publication Date: November 1998

Keyword(s): informal economy, Labour Supply and Russia

Programme Area(s): Transition Economics

Abstract: This paper investigates the informal labour market in Russia in late 1995 and estimates a labour supply function in the informal sector using nationally representative micro-data from the Russian Longitudinal Monitoring Survey, Round VI. The findings show that the informal economy constitutes a considerable source of additional income for many families, though it is associated with a large degree of wage and gender inequality. Informal job holding appears to be a safety valve for several individuals rationed in the regular labour market, either unemployed or experiencing compulsory periods of unpaid leave. At the same time, however, the data provides little support for the fact that wage arrears and low earnings from the regular economy increase the probability to join the informal sector. There are substantial gender differences in how demographic and market factors influence the attitudes towards informal activities. For men, the labour supply curve in the informal labour market is forward sloping, but the informal wage does not seem particularly significant for women.

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Bibliographic Reference

Kolev, A. 1998. 'Labour Supply in the Informal Economy in Russia during Transition'. London, Centre for Economic Policy Research.