Informal Employment in Russia: Definitions, Incidence, Determinants and Labor Market Segmentation

This paper takes stock of informal employment in Russia analyzing its incidence and determinants,
developing several measures of informal employment and demonstrating that the incidence varies
widely across the different definitions. We, however, show that the determinants of informal
employment are roughly stable across the different measures. We also estimate an informal-formal
wage gap at the means and across the entire wage distributions. We find only weak evidence for
labor market segmentation in Russia for salaried workers but establish a segmented informal sector
with a lower free entry tier and an upper rationed tier when including the self-employed and
entrepreneurs.