The Determinants of Unregistered Employment in Poland During Periods of High and Low Economic Growth
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Publish date: 2011-03-31
Gospodarka Narodowa 2011;246(3):1–27
The article examines changes in the determinants of unregistered employment in Poland during periods of high and low economic growth. Using Labor Force Survey data and probit models, the authors analyze the structure and determinants of unregistered employment in 2003 and 2008. In 2003 unemployment ran high, while in 2008 joblessness was relatively low and accompanied by high wage pressure. The authors look at two groups of workers in the context of unregistered employment: those officially unemployed and those officially employed but seeking to supplement their incomes by taking up jobs in the unregistered segment of the economy. After analyzing changes in basic demographic and socioeconomic variables, Cichocki and Tyrowicz conclude that unemployed individuals tend to take up jobs in the unregistered segment of the economy both when the labor market suffers from high unemployment and when wage pressure rises. Generally, the bargaining position of employees with regard to employers improved when the labor market revived and when the unregistered segment of the economy shrank in terms of both individual sectors and qualifications. Young unemployed people find it relatively easier to get informal work, the authors conclude, while no specific factors force young employees to look for jobs in the shadow economy. Theoretically, the tax-evading, unregistered segment of the economy could be expected to display pro-cyclical changes, the authors say, shrinking in times of fast economic growth and expanding in periods of poor macroeconomic trends. But in reality the shadow economy provides a considerable measure of flexibility to employers, as a result of which unregistered employment tends to display countercyclical behavior, according to Cichocki and Tyrowicz.