Shadow Employment in Eastern Europe: Practical Aspects of Evaluation and Counteraction

Abstract

The paper outlines the main problems of shadowing of the labor market in Eastern Europe on the example of Ukraine and explores the factors that have a direct impact on them. A comparative analysis of the most widespread methods of tax evasion in Ukraine has been conducted. Using the software package MS Excel and CurveExpert 5.0, a study was made of the dynamics of the population employed in the informal economy during the period from 2001 to 2018; the impact of the level of labor market shadowing on the standard of living of the population of Ukraine, as well as the dynamics of the volume of remittances of labor migrants to Ukraine. The level of employment of the population in the informal sector of the economy is analyzed. It is proposed one of the alternative methods of economical and mathematical nature, with the help of which it is possible to conduct researches of the imbalance of economic systems, the construction of a mathematical model of balance on the basis of modeling of a small group using the graph theory, which will enable to carry out tactical and strategic control over the interaction of the main categories of the population in the labor market.

Assessment of Aspects of the COVID-19 Crisis in the Context of Ensuring Economic Security

“…Kopytko et al [7], Ginevičius and Krivka [8], and Jakutis and Kazlovas [9] considered the characteristics of individual sectors of the economy and the problems were before the start of the pandemic.…”

ICT development and shadow economy: Empirical evidence from the EU transition economies

“…Implementation of the same ICT means in crime detection and prevention has proven to be efficient and successful (European Anti-Fraud Office, No 3/2019. When analysing the determinants of the informal economy, most authors emphasize tax and social contribution burden ( Kundt, 2017;Lesnik et al, 2014;Medina & Schneider, 2017, Schneider et al, 2015etc. ), quality of the public sector's performance (Blackburn et al, 2012;Enste, 2015;Michaela & Clipa, 2016), regulation of the labor market (Fialova, 2010;Fialova & Schneider, 2014;Gaspar_ eniene et al, 2017;Kopytko et al, 2019;Remeikien_ e et al, 2019), inefficient legal framework (Michaela & Clipa, 2016;Schneider et al, 2015) and low public tax morale (Arli et al, 2015;Michaela & Clipa, 2016;Williams et al, 2010) as most influential ones. However, the mutual links between ICTs and the shadow economy still earn insufficient scientific attention as seen in the related literature.…”

Econometric Analysis of Informal Employment in the Russian Labor Market

“…However, the problem of unreported employment is more severe in emerging countries that include the countries of Eastern Europe. Works [7,8] provide the assessments of the size of the "shadow" economy in Ukraine, the part of which is unreported employment. According to [7], the rate of those employed informally was over 26% of all the employed in 2015, but it had reduced to 21.8% by 2018.…”

“…Works [7,8] provide the assessments of the size of the "shadow" economy in Ukraine, the part of which is unreported employment. According to [7], the rate of those employed informally was over 26% of all the employed in 2015, but it had reduced to 21.8% by 2018. Study [8] provides an assessment of the financial losses due to "shadow" employment, incurred by the financial system of public social protection.…”

“…In the countries, such as France, Italy, or Spain, to reduce unreported employment, a soft policy is used, which combines lower taxes in the formal sector with the increased tax rates for the companies involved in the informal sector [14]. The authors of [7] tend to the same measures. Practically all those studying the labor markets of Eastern Europe notice the necessity of improving the economic situation in the country and enhancing its stability.…”