Estimation of the size of informal economy in Russian Federation based on consumer budget survey data

The shadow economy is by definition activity concealed from law. That is why it is not indicated in the official documents representing revenues of the people. However, one may use the information on household budget surveys to try to estimate the size of informal economy. This information represents only part the size of informal economy because people still have incentives to conceal their occupation in informal activities. Nevertheless, researchers can try to estimate the part of economical activity which is treated to the shadow economy. Both the fact of participation and the amount of household income are concealed. In this work the size of informal economy is evaluated through the share of income as the percentage of total income reported by a household. Microeconomic approach is at the base of the method evaluating the size of informal economy in this study based on the data of household budget survey. The key idea is that households indicate their expenditures on some items more correctly than they indicate their incomes. More than that, the income is concealed by a household with a certain structure, therefore the fact of attributing household to a shadow economy and evaluation of the size of income concealed by a household are connected. The justification of this approach to the household budget survey in Russian Federation is viewed in this work. The limitations of the methods are defined related to the Russian economy.Contacts: phone - 89154008206, email - yaroslav.48532@rambler.ru