**Table 4 Macro Determinants of the Shares of Informal employees in the Extended Labor Force. Eastern and Southern Europe, 2004-2009**

|(_a_|_lternativepa_|_nel data est_|_imates,_ _cont_|_inued_)|||
|---|---|---|---|---|---|---|
||[7]|[8]|[9]|[10]|[11]|[12]|
||<br>(semi-|<br>Popul<br>robust standa|<br>ation-average<br>rd errors clus|<br>d panel-data<br>tered on coun|<br>models<br>tries in paren|<br>theses)|
|Employment Protection<br>|3.138***|3.387***|3.343***|3.426***|4.302***|3.216***|
|Legislation strictness, v. 2|(0.571)|(0.647)|(0.749)|(0.820)|(0.469)|(0.683)|
|Govt. Effectiveness<sup>a</sup><br> <sup>a</sup>|-5.097***|-4.401***|-4.301***|-4.003***|-3.397***|-2.926*|
|(Rule of Law in [11])|(1.442)|(1.693)|(1.674)|(1.350)|(1.237)|(1.562)|
|Investment Freedom<sup>a</sup>|-0.043*|-0.063***|-0.065**|-0.056***|||
||(0.023)|(0.026)|(0.025)|(0.020)|||
|Tax Wedge for low wage<br>|||||0.268***|0.112*|
|earners, %<sup>a</sup>|||||(0.049)|(0.059)|
|Implicit Tax Rate on Labor<br>|0.300***|0.420***|0.413***|0.334***|||
|income, %<sup>a</sup>|(0.081)|(0.087)|(0.090)|(0.075)|||
|_MINWAGE_: Minimum wage (%<br>|0.643***|0.561***|0.555***|0.627***|0.492***|0.498***|
|of average wage in industry &<br>services); [7] & [8] assign to<br>Italy sample mean(_MINWAGE_)|(0.041)|(0.039)|(0.041)|(0.059)|(0.060)|(0.060)|
|_ITALY_ (does not have a|-7.727***|-10.181***|||||
|minimum wage)|(1.646)|(2.129)|||||
|log GDP per capita, PPP USD<br> <sup>a</sup>|5.787***|7.186***|7.155***|4.991***|2.023**|1.405|
|(annual average)|(1.069)|(1.102)|(1.116)|(1.095)|(0.926)|(1.076)|
|Real GDP Growth y-o-y<br>|0.237***|0.271***|0.266***|0.248***|0.140***|0.181***|
|(previous quarter)|(0.064)|(0.094)|(0.094)|(0.081)|(0.035)|(0.034)|
|Union Density,<br>|-0.203***|-0.253***|-0.250***|-0.258***|-0.323***|-0.225***|
|% of employees|(0.020)|(0.043)|(0.046)|(0.041)|(0.030)|(0.032)|
|ALMP spending, %GDP per<br> <sup>a</sup>|-71.283***|||-68.893***|||
|percentage point unempl.|(4.297)|||(9.209)|||
|UI spending, %GDP per||-40.164***|-40.093***||||
|<br>percentagepoint unempl.<sup>a</sup>||(4.239)|(4.838)||||
|_UBSA:_Average unempl. benefit<br>and social assistance net|||||-0.845***|-0.719***|
|replacement rate over 60<br>months of unemployment,%<sup>a</sup>|||||(0.098)|(0.105)|
|_UBSA-_squared/100|||||0.776***|0.625***|
||||||(0.101)|(0.098)|
|Gini index<sup>a</sup>|0.199***|0.386***|0.383***|0.226**|||
||(0.063)|(0.086)|(0.098)|(0.104)|||
|Minority population (native), %|0.218***|0.268***|0.269***|0.252***|||
||(0.022)|(0.032)|(0.035)|(0.037)|||
|Root MSE|1.657|1.694|1.704|1.614|1.048|1.240|
|# obs. [# countries]|31 [14]|30 [14]|29 [13]|29 [13]|27 [12]|27 [12]|
|Obs. per country, min/avg./max|1/2.2/3|1/2.1/3|1/2.2/3|1/2.2/3|1/2.3/3|1/2.3/3|

_Notes:_ Constant terms are not reported. Countries covered: Model [7]: CZ (2004, 2009); SK ( 2006, 2008); PL (2004, 2006, 2008); HU (2005, 2006, 2009); EE (2004, 2006, 2008); LV (2007, 2009); LT(2009); SI (2004, 2006, 2008); BG (2006, 2009); RO (2008); ES (2004, 2006, 2008); PT (2004, 2006, 2008); IT (2006); GR (2005, 2009). Model [8] excludes SI (2004). Models [9]-[10] exclude also IT. Models [11]-[12] exclude also EE (2004), LT (2009), and BG (2006), but include SK (2004).<sup>a</sup> Lagged 1 year.

_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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