Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

Informal employment: risks and consequences for the Ukrainian labor market


Institutional pathologies and the inability of the institutional order of the labor market to adapt to possible changes is manifested in the expansion of the informal segment of  labor market and in the distortionof social and labor relations. The author considers theoretical approaches to defining the volume and characteristics of the informal segment of the labor market. Generalized are the advantages and disadvantages of individual methods of estimating informal employment. Using logistic regression, author evaluate the risks of informal employment by socio-demographic characteristics, employment levels and occupation. According to the results of the evaluation, it is proven that the most dangerous age is the youngest and the oldest age groups, as these categories are the most vulnerable and socially unprotected in market conditions. It is those lacking vocational education who have the greatest risk of entering the informal employment segment. The calculations prove that having a vocational education significantly raises the “gain” for women employed in agriculture, and information and telecommunications. It is proven that the structure and level of employment in the formal and informal sectors is an important factor in aggregate labor productivity. By evaluating the aggregate productivity of formal and informal market segments, the author substantiates the importance of the relocation component in terms of economic development prospects. Thus, the calculations prove that the effect of the flow of workers between the informal and formal segments is quite significant for agriculture, trade and construction. While, on the contrary in healthcare, education, transport, and processing, the impact of the intra-industry component on aggregate productivity is greater in comparison to the displacement factor. The weight of the relocation component in the economy as a whole is higher than that of the intra-industry impact factors. Creating an institutional environment that would help reduce the economic activities in the informal segment would objectively promote economic growth.

  1. Libanova, E.M., Balanda, A.L. (1998). The informal sector of the labor market: definitions and methods of assessment. Rynok pratsi ta zainiatist naselennia, 6, 245-246 [in Ukrainian]

  2. Kharazishvili, Yu.M., Dmytrenko, N.M. (2010). Methodical approach to assess shadow employment in Ukraine. Ekonomika UkrainyEconomy of Ukraine, 12, 16-28 [in Ukrainian]

  3. Kolot, A.M. (2010). Social and labor sphere: the state of relations, new challenges, development trends. Kyiv: KNEU [in Ukrainian]

  4. Kostrytsya, V.I., Burlai, T.V. (2019). Undeclared work as a ‘new normality’ globally and in Ukraine. Ekon. prognozuvannâ – Economy and forecasting, 1, 7-34 [in Ukrainian]

  5. Grishnova, O., Dmitruk, S. (2015). Human Capital Under Crisis: Evaluation and Preservation Opportunities Search. Visnyk Kyivskoho natsionalnoho universytetu imeni Tarasa Shevchenka. Ekonomika – Bulletin of Taras Shevchenko National university of Kyiv. Economics, 5 (170), 11-16 [in Ukrainian]

  6. Shumska, S., Nezhyvenko, O. (2018). Ukrainian Undeclared Work Survey: First Findings. The Scientific Papers NaUKMA. Economics, 3, 1, 89-95.

  7. Tsymbal, O. (2017). Undeclared work in Ukraine: forms of manifestation, scope and measures within the labor inspection system. Kyiv: MBP [in Ukrainian]

  8. Williams, C., Round, J., Rodgers, P. (2011). Explaining the Normality of Informal Employment in Ukraine: A Product of Exit or Exclusion? American Journal of Economics and Sociology, 3, 729-755.

  9. Barberis, N., Shleifer, A., Vishny, R. (1998). A Model of Investor Sentiment. Journal of Financial Economics, 49 (3), 307-343.

  10. Hart, K. (1973). Informal Income Opportunities and Urban Employment in Ghana. The Journal of Modern African Studies, 11, 1, 61-89.

  11. Recommendations concerning the statistical definition of informal employment. (2003). Seventeenth International Conference of Labour Statisticians (ICLS). URL: [in Russian]

  12. Harris, J.R., Todaro, M.P. (1970, March). Migration, Unemployment and Development: A two Sector analysis. American Economic Review, 126-142.

  13. Saavedra, J., Chong, A. (1999). Structural reform, institutions and earnings: Evidence from the formal and informal sectors in urban Peru. Journal of Development Studies, 35 (4), 95-116.

  14. Gerxhani, K. (2004). The Informal Sector in Developed and Less Developed Countries: A Literature Survey. Public Choice, 120, 3 (4), 270-275.

  15. Portes, A., Sassen-Koob, S. (1987). Making it Underground: Comparative Material on the Informal Sector in Western Market Economies. The American Journal of Sociology, 93, 1, 30-61.

  16. Cox, R., Watt, P. (2002). Globalization, polarization and the informal sector: the case of paid domestic workers in London. Area, 34.1, 39-47.

  17. Edgcomb, E.L., Thetford, T. (2004). The informal economy: making it in rural America. FIELD (Microenterprise Fund for Innovation, Effectiveness, Learning and Dissemination). The Aspen Institute. URL:

  18. Gimpelson, V.E., Kapelyushnikov, R.I. (Eds.). (2006). Non-standard employment in the Russian economy. Moscow: Izd. Dom GU-VShE [in Russian]

  19. Fields, G.S. (1990). Labor Market Modeling and the Urban Informal Sector: Theory and Evidence. In D. Turnham, B. Salomé, A. Schwarz (Eds.), The Informal Sector Revisited. Paris: Development Centre of the Organization for Economic Co-Operation and Development.

  20. International Seminar: Employment and Inequality Outcomes. (2009, April 8). Is Informal Normal? Towards More and Better Jobs. Paris: OECD. URL:

  21. Tawab, G.A. (2017, June 21). Informal is the new normal: Why informal employment is here to stay. Ford Foundation Center for Social Justice. URL:

  22. Kapelyushnikov, R.I. (2012). Informal employment in Russia: what do alternative definitions say? Moscow: Izd. dom Vysshaya shkola ekonomiki [in Russian]

  23. Blyzniuk, V., Shumska, S. (2018). Macroeconomic and global effects of expanding the informal segment of labor market: the case of Ukraine. In Proceeding of the 18th International Scientific Conference: Globalization And Its Socio-Economic Consequences. University оf Zilina, 10th – 11th October 2018. Part I. Economic Impact of Migration (рр. 46-53). Rajecke Teplice, Slovak Republic.

  24. Blyzniuk, V. (2017). Informal employment in the labor market: features and characteristics of this segment. In International Conference on Theoretical and Applied Economic Practices “Economic growth in conditions of globalization: sustainable development models”, the 12th edition, 12–13 October 2017: Vol. II (pp. 177-185). Chisinau: INCE.

  25. Yuryk, Ya., Kuzmenko, G. (2016). Creating a scoring model to assess risk events on the labor market. Ekon. prognozuvannâ – Economy and forecasting, 3, 107-118 [in Ukrainian]

  26. Vodopyanova, A.I., Leonova, L.A. (2015). A study of the nature of informal employment. Finansovaya analitika: problemy i resheniya – Financial analytics: science and experience, 6 (240). URL: [in Russian]

  27. Yurik, Y.I., Kuzmenko, G.G. (2017). The Possibilities оf Estimating Risk Events During Strategic Management оf Human Resources. Demohrafiia ta sotsialna ekonomika – Demography and social economy, 3 (31), 61-75.

  28. Veredyuk, O.V. (2016). Informal employment: structure and risk determinants in Russia. Vestnik SPbGU – St Petersburg University Journal of Economic Studies, SUJES [in Russian]

  29. Patsiorkovskii, V.V., Patsiorkovskaya, V.V. (2005). SPSS for sociologists. Moscow: ISEPN RAN [in Russian]

  30. Paul, A. (2016). What’s the Best R-Squared for Logistic Regression? URL:

  31. Perry, G.E., Arias, O.S., Fajnzylber, P., Maloney, W.F., Mason, A.D., Saavedra-Chanduvi, J. (2007). Informality: Exit and Exclusion. Washington (DC): The World Bank.

  32. La Porta, R., Shleifer, A. (2014). Informality and Development. Journal of Economic Perspectives, 28 (3), 109-126.

  33. Petrova, I.L., Blyzniuk, V.V. (2018). The Ukrainian labor market: imperatives and opportunities for change. Kyiv: NAS of Ukraine, Institute for Economics and Forecasting, National Academy of Sciences of Ukraine. URL: [in Ukrainian]

  34. Voronina, S.V. (2016). The impact of reallocation of the employees working in the informal economy on labor efficiency in the Russian regions. Rosiiskoe predprinimatelstvo, 17, 3, 315-328 [in Russian]

  35. Voskoboynikov, I., Gimpelson, V. (2015). Productivity Growth, Structural Change and Informality: The Case of Russia. Voprosy Ekonomiki, 11, 30-61.

  36. Gimpelson, V., Kapeliushnikov, R. (2014). Between Light and Shadow: Informality in the Russian Labour Market. IZA DP No. 8279.

  37. Horodnic, I.A. (2016). Cash wage payments in transition economies: consequences of envelope wages. IZA World of Labor.

Full text