Earnings Inequality and Informal Employment in Russia

30 Pages Posted: 30 Oct 2013

See all articles by Anna Lukiyanova

Anna Lukiyanova

National Research University Higher School of Economics (Moscow)

Date Written: October 30, 2013

Abstract

In this paper I investigate the impact of informality on earnings inequality in Russia using RLMS-HSE data for 2000-2010. I find that during the whole period earnings inequality was substantially higher in the informal sector. Informality increases earnings polarization, thereby widening both tails of the distribution. Changes in the earning distribution of the formal sector were mainly generated by changes in the distribution of hourly earnings. In the informal sector, reduction of inequality occurred via two channels: Differences in hourly rates and working hours both declined. Changes in the structure of informality and conditional wage differentials did not have a significant impact on the overall earnings inequality, with the exception of decline in irregular employment.

Keywords: earnings inequality, informal economy, decomposition, recentered influence functions

JEL Classification: C21, D63, J31, J42

Suggested Citation

Lukiyanova, Anna, Earnings Inequality and Informal Employment in Russia (October 30, 2013). Higher School of Economics Research Paper No. WP BRP 37/EC/2013, Available at SSRN: https://ssrn.com/abstract=2347350 or http://dx.doi.org/10.2139/ssrn.2347350

Anna Lukiyanova (Contact Author)

National Research University Higher School of Economics (Moscow) ( email )

Myasnitskaya street, 20
Moscow, Moscow 119017
Russia

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