The subject of informal employment has been discussed time and again by leading economists and sociologists over the past 40 years. The very concept of “informality” was introduced by British anthropologist Keith Hart in his Ghana’s city labor market research to describe involuntary low-qualified and underpaid self-employment. However since then it was revised and reconsidered several times by representatives of different approaches within social science as empirical studies showed that some kinds of informality are “better off” when compared to others. Informality on the labor market appears to be very heterogeneous and researchers used a variety of different definitions in order to analyze it which in turn posed many problems of theoretical and methodological kind.
Today informal employment plays an important role in the economies of many modern countries regardless of their type or level of development. Although the vast majority of papers concerning the issue were based on the examples provided by the economies of developing countries, labor market informality appears as emerging phenomenon in developed and transition countries as well. In the latter case the process of transformation was accompanied by a large increase in informality which appeared as one of the important mechanisms of adaptation to its negative shocks. However until now the amount of publications devoted to labor market informality in transition countries can be regarded as small and the issues of its nature and consequences as understudied with Russia being no exception. The studies presented in this report are aimed at filling this gap of knowledge about Russian labor market. Besides that the issue of informality is also closely related to one of the most prominent challenges for the modern economic analysis – the connection between the quality of institutions and the nature of economic development. Within the scope of the theory of institutions the advanced forms of informal labor market behavior can be regarded as the certain immense failure of the existing system of formal labor market institutions. It can also be a signal of serious dysfunctions in a system of modern Russian institutions as a whole.
The main object of the surveys presented in the report is the scale, dynamics and various socio-professional and institutionalized factors of Russian labor market informality.
The aim of the surveys is the comprehensive analysis of various features of informality on the Russian labor market.
The major source of data is provided by 8-18 rounds of large panel Russia Longitudinal Monitoring Survey – Higher School of Economics (RLMS-HSE) covering the period of 1998-2010. The set of questions - so called “Strategies of choice”) - dedicated to the analysis of informality on the Russian labor market that was specially designed and implemented into the core questionnaire of RLMS-HSE survey in 2009 also provided new in-depth insights into the nature and features of Russian informal employment. Additionally the authors used the data of the Russian Labor Force Survey conducted regularly by Federal State Statistics Service for 1999-2010; special set of questions containing information about respondents working history for the past 10 years included in RLMS-HSE questionnaire in 2008; official Federal State Statistics Service publications about wages in Russian economy.
Results received during the surveys showed that the size of informal employment has increased substantially in 2000s with its dynamics and structure shaped by the combined action of various parts of the system of modern institutions. Results presented in the report can have a number of important consequences for the evolution of labor market theory, methodology and empirical analysis- 1) they promote the labor market theory concerning the analysis of the transition economies; 2) they improve the methodology of informal employment data collection and econometrics analysis; 3) they provide new insights into the understanding of the features of Russian labor market mechanisms.
The following foreign partners of the Centre for Labour Market Studies took part in the process of conducting the studies presented in the report:
- Hartmut Lehmann, PhD, Professor of Economic Policy in the department of economics at the University of Bologna, Program Director of the IZA (Institute for the Study of Labor, Bohn, Germany) research area "Labor Markets in Emerging and Transition Countries".
- Anzelika Zaiceva, Ph.D, Assistant Professor at the Department of Economics, University of Modena and Reggio Emilia, Visiting Research Fellow at IZA.