Unreported employment and tax evasion in mid-transition: comparing developments and causes in the Baltic States

Jaanika Meriküll () and Karsten Staehr ()

No 2008-06, Bank of Estonia Working Papers from Bank of Estonia

Abstract: This paper compares the prevalence and determinants of unreported employment in the three Baltic States in 1998 and 2002 using a hitherto little used dataset. The prevalence of unreported employment varies substantially across the three countries and across the two sampling years. Microeconometric estimations show that firm-related characteristics, such as sectoral activity, firm size and employment trends, are important determinants of unreported employment in all three countries, whereas the impact of individual factors varies across countries and time. It is shown that only 10–30 percent of the changes in unreported employment between 1998 and 2002 can be accounted for by changes in individual characteristics and firm-related factors. Provisional calculations suggest that the net gain for individuals undertaking unreported employment is modest, in particular among individuals who regularly engage in such activities

Keywords: Unreported employment; informal employment; envelope wages; tax evasion (search for similar items in EconPapers)
JEL-codes: H26 H24 D19 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab, nep-pbe and nep-tra
Date: 2008-11-28, Revised 2008-11-28
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