**Table 9 Effects of macro factors on informal employment and unemployment in Europe (2004-2009), by country group** **<u>(Standardized coefficients from seemingly unrelated regressions with robust std. errors clustered on countries)</u>**

||_Emp_|_loyees with_|_out legal co_|_ntract_||_Informal s_|_elf-employe _|_d_|_U_|_nemployed_|_and discoura_|_ged_|
|---|---|---|---|---|---|---|---|---|---|---|---|---|
|||<sup>d</sup>||(_y_ <br>|= % of labor<br>|force extende<br>|d to include<br><sup>d</sup>|discouraged w<br><sup>d</sup>|orkers)<br>||||
||E & S|W & N|EUR27|EUR25|E & S|W & N|EUR27|EUR25|E & S|W & N|EUR27|EUR25|
|_EPL_2_|0.98***|4.00**|-1.36***|-1.53***|0.86*|-0.68**|0.41|0.65|0.13|2.70***|-0.57|-0.93***|
|_GOV_EFFECT_<sup>a</sup>|-3.17**|-1.62**|-3.70***|-3.31***|-0.03|-0.52**|1.07|4.80*|-2.34|-0.67|-2.06***|-2.27***|
|_GOV_EXPsq/100_||||||-1.56***||||-1.11***|||
|_INVEST_FREE_|-3.05***||||-5.65***||||0.77||||
|_TRADE_FREE_|-0.68*||||0.42||||-1.30**||||
|_BUS_FREE_||-1.12**|-0.98**|-0.92***||-0.39***|-1.94***|-1.17**||-0.36|0.05|-0.75**|
|_TAX_WEDGE_ <sup>b</sup>||-6.81***|-3.66***|-3.93***||-0.66*|-1.40***|-1.37**||-1.05**|-0.13|-0.94**|
|_MIN_WAGE_|2.73***|-4.50**|2.32***|1.50**|2.34***|0.47*|1.66<sup>(</sup>*<sup>)</sup>|1.27|3.46***|-2.17***|2.97***|2.40***|
|_NO_MINWAGE_||-2.47*|1.09|1.13||1.06***|1.39|0.64||-0.69|1.71|2.24|
|_logGDP_PC_<sup>b</sup>|2.60**|-0.49|3.52***|2.51**|3.15***|-0.49**|1.77|0.42|-0.51|-3.26***|-1.47|-1.40|
|_GROWTH_|0.77*|0.23|0.58***|0.58*|0.89***|0.17|0.34|0.58**|-0.64|-1.23***|-0.73<sup>(</sup>*<sup>)</sup>|-1.11***|
|_UNION_|-2.60***|1.96***|0.36|0.28|-4.24***|0.81***|-1.06**|-1.41*|-0.79|2.85***||0.69|
|_LMP_ACTIVE_<sup>b</sup>||||||-0.53***||-2.80***||-1.92***||-3.47***|
|_LMP_PASSIVE _<sup>b</sup>||2.71***||0.82||||||2.14***||2.42***|
|_UBSA_<sup>b</sup>||-3.04***|||||||||||
|_GINI_<sup>b</sup>|||0.86<sup>(</sup>*<sup>)</sup>|0.79<sup>(</sup>*<sup>)</sup>|||1.44**|2.12***|||0.99<sup>(</sup>*<sup>)</sup>|0.15|
|_IMMIGR_|1.57***|0.12|0.91***|1.17***|0.13|0.05|-1.07**|-2.20***|-0.94*|2.42***|-0.53|0.25|
|Root MSE|2.05|1.51|2.97|3.11|2.99|0.87|3.27|3.09|3.66|1.77|3.26|2.84|
|R-squared(OLS)|0.7867|0.8937|0.7384|0.7493|0.7895|0.8912|0.5490|0.6280|0.5234|0.8462|0.5912|0.7235|
|N[# countries]|35[14]|34 [12]|67 [27]|61 [25]|35[14]|34 [12]|67 [27]|61 [25]|35[14]|34 [12]|67 [27]|61 [25]|
|Table[model]|3[2a]|5[1a]|7[1a]|7[2a]|3[2b]|5[1b]|7[1b]|7[2b]|3[2c]|5[1b]|7[1b]|7[2b]|

_Notes:_ Reported is change in _y_ caused by a 1 std. deviation change in _x_ . E, S, W, N – Eastern, Southern, Western and Northern Europe, respectively; EUR25 includes all EU27 countries (except CY, MT, and LU), as well as NO; EUR27 (as well as E & S) includes also RU and UA; W & N includes CH (which is absent in EUR 27). IT (2006) and LT(2009) are included in EUR25/27 but excluded from E & S. See Tables 3B and 4 for (non-standardized) results for E & S with labor market spending variables.<sup>a</sup> (respectively,<sup>b</sup> ) – variable is lagged 1 year in E & S (respectively, all) models. Non-standardized coefficients reported for dummy _NO_MINWAGE_ . c Models in which _GOV_EFFECT_ is instrumented (see Annex 2). (*), *, **, *** - estimates significant at 11%, 10%, 5%, 1% level, respectively. See Annex 1 for details on the explanatory variables. _Sources:_ Own calculation.

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