Informal sector employment: Reasons for negative trends

Abstract

The problem of employment in the informal sector of the economy escalated during the pandemic, post-covid recovery and, especially, in the period of sanctions. As an interdisciplinary field of research in the humanitarian, socio-economic, information and mathematical spheres, issues of employment, unemployment, social benefits are increasingly resonating in modern publications. The global framework of the research subject often makes difficult to formalize the processes, especially in the shadow economy. The authors used the panel data analysis to assess the dynamics of employment in the informal sector and the causes of negative trends in the post-pandemic period. The number of model explanatory variables for the period 2010–2021 was 84 with subsequent cutoff and reduction to 32 parameters. To compile a panel data the authors used the official information from Rosstat and information obtained by expert surveys. During the study the scientists create the models of combined regression, model with fixed effects, and model with individual, including random, effects. As a result the authors obtained the ratio “employment in the informal sector — the level of hidden economic activity”. The important applied relevance of the research is the possibility to generate control, both at the state and economic level, in terms of the identified reasons for the growth of employment in the informal sector in order to reduce their negative impact.