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Working paper

Рынки труда и их институты в странах с переходной экономикой

Леман Х., Muravyev A.

Having unique data we investigate informal employment and “envelope payments” as additional costs of worker displacement in the Russian labor market. In particular we analyze whether displaced workers experience
more involuntary informal employment than their non-displaced counterparts. Our main results confirm
our contention that displacement entraps some of the workers in involuntary informal employment. Those who quit, in turn, experience voluntary informality for the most part, but there seems a minority of quitting workers who end up in involuntary informal jobs. This scenario does not fall on all the workers who separate but predominantly on workers with low human capital. Being able to distinguish between involuntary and voluntary informal employment our study contributes to the debate in the informality literature on the issue of segmented versus integrated labor markets. We also pursue the issue of informality persistence and find that informal employment is indeed persistent as some workers churn from one informal job to the next. Job separations in general and not displacement events per se are associated with larger “envelope payments”.