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Eliciting permanent and transitory undeclared work from matched administrative and survey data / Péter Elek (Eötvös Loránd University (ELTE)), János Köllő (Hungarian Academy of Sciences and IZA) ; IZA Institute of Labor Economics
VerfasserElek, Péter ; Köllő, János
KörperschaftForschungsinstitut zur Zukunft der Arbeit
ErschienenBonn, Germany : IZA Institute of Labor Economics, May 2017
Elektronische Ressource
1 Online-Ressource (37 Seiten) : Diagramme
SerieDiscussion paper ; no. 10800
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dp10800.pdf [0.6 mb]Eliciting permanent and transitory undeclared work from matched administrative and survey data
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We study the undeclared work patterns of Hungarian employees in relatively stable jobs, using a panel dataset that matches individual-level self-reported Labour Force Survey data with administrative records of the Pension Directorate for 2001-2006. We estimate the determinants of undeclared work using Heckman-type random-effects panel probit models, and develop a two-regime model to separate permanent and transitory undeclared work, where the latter follows a Markov chain. We find that about 6-7 per cent of workers went permanently unreported for six consecutive years, and a further 4 per cent were transitorily unreported in any given year. The models show lower reporting rates - especially in the permanent segment - among males, high-school graduates, those in agriculture and transport, various forms of atypical employment, and small firms. Transitory non-reporting may be partly explained by administrative records missing for technical reasons. The results suggest that (i) the ‘aggregate labour input method widely used in Europe can indeed be a simple yet reliable tool to estimate the size of informal employment, although it slightly overestimates the true magnitude of black work (ii) the long-term pension consequences of undeclared work are substantial because of the high share of permanent non-reporting.