# **Table 7 Macro determinants of the shares of informal employees, informal self-employed, and unemployed (incl. discouraged) in the extended labor force. Europe, 2004-2009**

||(_seemin_|_gly unrelate_|_d regressio_|_ns_)|||
|---|---|---|---|---|---|---|
||Informal e<br>(%<br>Estimat<br>|mployees<br>of labor forc<br>ed coefficien<br>|Informal s<br>e extended t<br>ts (robust sta<br>|elf-employed<br>o include discou<br>ndard errors clu<br>|Unemp<br>disco<br>raged work<br>stered on co<br>|loyed and<br>uraged<br>ers)<br>untries)<br>|
||[1a]|[2a]|[1b]|[2b]|[1c]|[2c]|
|Employment Protection|-2.673***|-2.887***|0.843|1.197|-1.120|-1.753***|
|Legislation Strictness, v. 2|(0.948)|(0.819)|(0.903)|(0.934)|(0.728)|(0.674)|
|Government effectiveness<br>([1b] [2b] intrmntd|-5.059***|-5.676***|1.459|8.212*|-2.815***|-3.895**|
|, : suee, see<br>Annex 2 )|(1.901)|(2.153)|(3.068)|(4.881)|(1.369)|(1.706)|
|Business Freedom|-0.075**|-0.086***|-0.148***|-0.109**|0.004|-0.070**|
||(0.034)|(0.032)|(0.053)|(0.049)|(0.051)|(0.032)|
|Tax Wedge on low wage|-0.552***|-0.577***|-0.212***|-0.201**|-0.020|-0.138**|
|earners, % (lagged 1 year)|(0.079)|(0.075)|(0.081)|(0.089)|(0.073)|(0.055)|
|Minimum Wage (% of average<br>wage in industr & services)|0.354***|0.367**|0.253<sup>(</sup>*<sup>)</sup>|0.311|0.453***|0.587***|
|y|(0.095)|(0.168)|(0.160)|(0.257)|(0.088)|(0.156)|
|_NO_MINWAGE_: the country<br>|1.092|1.130|1.394|0.640|1.705|2.235|
|does not have a minimum wage|(1.562)|(1.642)|(1.598)|(1.302)|(1.681)|(1.514)|
|log GDP per capita, PPP USD|3.633***|3.221**|1.828|0.544|-1.519|-1.791|
|(annual average, lagged 1 year)|(1.265)|(1.303)|(1.786)|(2.282)|(0.984)|(1.173)|
|Real GDP growth, y-o-y,|0.114***|0.117*|0.067|0.119**|-0.145<sup>(</sup>*<sup>)</sup>|-0.226***|
|quarterly data lagged 1 quarter|(0.050)|(0.060)|(0.076)|(0.064)|(0.089)|(0.060)|
|<br>_LMP_ACTIVE_: Active labor||||<br>-33.216***||<br>-41.139***|
|market measures spending, %||||(12.587)||(8.886)|
|<br>GDP per percentage point of<br>unemployment (lagged 1 yr)|||||||
|_LMP_PASSIVE_: Defined in the||6.522||||19.365***|
|same way as_LMP_ACTIVE_||(5.148)||||(6.434)|
|Union Density,|0.016|0.012|-0.047**|-0.060*|-0.021|0.029|
|<br>% of employees|(0.024)|(0.028)|(0.018)|(0.036)|(0.028)|(0.028)|
|Population with Immigrant|0.149***|0.185***|-0.176**|-0.348***|-0.087|0.039|
|<br>Background, %|(0.050)|(0.057)|(0.074)|(0.118)|(0.063)|(0.064)|
|Gini index|0.174<sup>(</sup>*<sup>)</sup>|0.172<sup>(</sup>*<sup>)</sup>|0.292**|0.460***|0.200<sup>(</sup>*<sup>)</sup>|0.033|
|(lagged 1 yr)|(0.108)|(0.106)|(0.169)|(0.171)|(0.122)|(0.125)|
|Root MSE|2.9717|3.1089|3.5521|3.3192|3.2598|2.8376|
|R-squared|0.7384|0.7493|0.4693|0.5616|0.5912|0.7235|
|# obs.[# countries]|67[27]|61[25]|67[27]|61[25]|67[27]|61[25]|
||Descriptive|statistics on d|ependent va|riables|||
|Mean|5.45|5.40|9.53|<br>9.90|10.23|<br>10.13|
|Std. Dev.|5.30|5.55|4.45|<br>4.48|4.65|<br>4.78|
|Min|0.40|0.40|3.10|<br>3.10|2.60|<br>2.60|
|Max|26.90|26.90|26.20|<br>26.20|23.00|<br>23.00|

_Notes:_ Countries covered: Models [1a], [1b], [1c]: EU-27 (except for Cyprus, Luxembourg, and Malta), Norway, Russia, and Ukraine. Models [2a], [2b], [2c] exclude Russia, Ukraine and the 2004 observation on Slovenia. (*) , *, **, *** - estimates significant at 11%, 10%, 5%, 1% level, respectively.

_Sources:_ Dependent variables: Calculations with ESS data (see Table 1 for details). Explanatory variables - see Annex 1 (Table A1) _._ Model estimates - own calculations.

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