Seminar on 'Shadow Economy Index for Russia: Cross-Country Comparisons'

On January 30 a research seminar on 'Shadow Economy Index for Russia: Cross-Country Comparisons' will be held at HSE. THe event is organised by the School of Sociology and Centre for Labour Market Studies. 

About the speaker: Dr. Arnis Sauka is Professor, Director of the Centre for Sustainable Business at the Stockholm School of Economics in Riga. His main research interests include shadow economy, competitiveness and internationalization of companies. Arnis has a Ph.D. from the University of Siegen (Germany) and has been a Visiting Scholar at Jonkoping International Business School (Sweden) and University College London (U.K.).

Abstract: 

The Shadow Economy Index draws on methodology developed by Putnins and Sauka (2015) using information from entrepreneurs. It combines business income that has been concealed from authorities, unregistered or hidden employees, and “envelope wages” to estimate the size of the shadow economy as a proportion of GDP. An advantage of this approach is that it is able to provide more detailed information on the components of the shadow economy, like envelope wages and underreporting of business profits, which are the two largest components of the Russian shadow economy.

The report analyses the state of the shadow economy in Russia in 2017-2018 and provides evidence on the main factors that influence entrepreneurs’ involvement in the shadow economy. The findings show that the size of the shadow economy in Russia was ca 45-46 % of the GDP in 2017-2018, similar to the level of shadow economy in such countries as Kyrgyzstan, Kosovo, Ukraine and Romania, but higher than the level seen in the Baltic countries. Thus, the findings are largely consistent with other less direct approaches for estimating the size of the shadow economies, such as Schneider (2019).

The report suggests that there is very high level of bribery in Russia: the magnitude of bribery (percentage of revenue spent on ‘getting things done) is found to be 26.4%, whereas more than one-third of companies in Russia pay in bribes more than 25% of the revenue or contract value.

Finally, while firms of all sizes participate in the shadow economy, we find that younger firms tend to do so to a greater extent than older firms. The results support the notion that young firms use tax evasion as a means of being competitive against larger and more established competitors.

Start time: 18:00
Address: 11 Myasnitskaya, room 328
Working language: English

If you need a pass to HSE, please contact lartamonova@hse.ru.