Subjective welfare and the informal sector: the case of Russia

Type Working Paper
Title Subjective welfare and the informal sector: the case of Russia
Author(s)
Publication (Day/Month/Year) 2005
URL https://www.researchgate.net/profile/Ekaterina_Kalugina/publication/228638454_Subjective_welfare_and​_the_informal_sector_the_case_of_Russia/links/09e4151112348deed9000000.pdf
Abstract
This paper aims at analysing the effect of working in the informal sector on subjective poverty and exclusion in Russia using the Russian Longitudinal Monitoring Survey (1994-2003). We use several econometric approaches. First of all, the simple ordered probit model is run. Furthermore, we explore the panel structure of the dataset estimating the fixed effects conditional logit model. Finally, to take into account the endogenous nature of working in the informal sector and individual subjective poverty, we provide a ML estimation of two simultaneous equations: ordered probit for subjective exclusion or subjective poverty and (ordered) probit for individual labour market status. The results show that the probability of feeling poor is greater for individuals working in informal sector and it is true for all econometric specifications. We interpret this result like evidence that survival plays an important role in the decision of working in the informal sector in Russia.

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