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Social and Economic Consequences of Informal Labor and Ways to Reduce It

Social and Economic Consequences of Informal Labor and Ways to Reduce It

Journal of Economic Regulation, , Vol. 8 (no. 2),

The purpose of the article is to analyse the consequences of informal employment for the Russian labor market. The author approaches informal employment from the legalism perspective. While distinguishing between formal and informal employment, the author relies on the contract criterion, i.e. presence or absence of formally established labor relations. The reasons for the existence and reproduction of informal employment relations in the Russian labor market are imperfect institutions of regulation and a complex of economic and social factors. The consequences of informal hiring for participants of the employment relationship are different. In the article are considered the positive and negative consequences of informal hiring for employees, employers and the state. It is shown that the problem of informal hiring is multilayered, not reducible only to imperfect labor market regulation institutions and requires adequate complexity of approaches. The ways to reduce the level of informality on the Russian labor market: the stimulation of an increase in the number of formal jobs and the legalization of business, especially in the smallest and micro-business; refusal of attempts of violent and excessive formalization of employment; improvement of the quality of regulation of the social and labor conditions and business climate. Special attention should be paid to estimation the balance of benefits and losses associated with informality for all participants of social and labor relations.

Keywords: informal employment; unregistered employment; labour contracts; social and economic consequences; quality of regulation

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