Vladimir Gimpelson1, Rostislav Kapeliushnikov1
  • 1 National Research University Higher School of Economics, 20 Myasnitskaya Str., Moscow, 101000, Russian Federation

Is it Normal to be Informal?

2013. Vol. 17. No. 1. P. 3–43 [issue contents]

This article raises two important questions related to labor market informality. The first one asks what kind of characteristics make workers more exposed to the risk of being informal. The second focuses on wage setting and differentiation of earnings in the informal sector. Our estimates show that informality has become a «normal» state given its large and growing scale. Internal heterogeneity of the informal sector and its two-tier structure are also typical or «normal» given cross-country patterns. Finally, earnings penalty generated by informality makes 15–20% on average but declines along the wage distribution. These tendencies are observed in many medium income countries as well and therefore can also be considered «normal». More generally, existence of large scale segment of informal jobs on the Russian labour market with its specific wage setting practices indicates an institutional failure and cannot be accepted as «normal».

Citation: Gimpelson V., Kapeliushnikov R. (2013) Normal'no li byt' neformal'nym? [Is it Normal to be Informal?]. HSE Economic Journal, vol. 17, no 1, pp. 3-43 (in Russian)
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