**Table 5 Macro determinants of the shares of informal employees, informal self-employed, and unemployed (incl. discouraged) in the extended labor force. Western and Northern Europe, 2004-2009** _(seemingly unrelated regressions)_

||Informal|employees|Inform<br>em|al self-<br>loed|Unem<br>dis|ployed and<br>ouraed|
|---|---|---|---|---|---|---|
||(<br>Estim<br>|% of labor for<br>ated coefficien<br>|p<br>ce extended t<br>ts (robust st<br>|y<br>o include dis<br>andard errors<br>|<br>couraged wo<br>clustered on<br>|g<br>rkers)<br>countries)<br>|
||[1a]|[2a]|[1b]|[2b]|[1c]|[2c]|
|Employment Protection|7.651**|7.140***|-1.298**|-0.788|5.165***|5.604***|
|Legislation Strictness, v. 2|(3.860)|(2.388)|(0.620)|(0.597)|(1.243)|(1.491)|
|Government Effectiveness<br>|-6.200**||-2.000**||-2.551||
|([1a]: instrumented, see Annex 2 )|(3.028)||(1.074)||(1.771)||
|Satisfaction with the Govt.<br>||-2.609***||-0.274||-0.362|
|([2c]: instrumented, see Annex 2 )||(0.681)||(0.191)||(0.671)|
|(Government Expenditures as<br>||-0.161|-0.252***|-0.305***|-0.179***|-0.245***|
|% of GDP), squared /100||(0.104)|(0.052)|(0.055)|(0.068)|(0.084)|
|Business Freedom|-0.119**||-0.042***||-0.038||
||(0.051)||(0.015)||(0.032)||
|Monetary Freedom<br>||-0.394***||-0.030||0.024|
|(lagged 1 year)||(0.126)||(0.073)||(0.157)|
|Tax Wedge for low wage|-0.742***|-0.764***|-0.072*|-0.062|-0.115**|-0.089|
|earners, % (lagged 1 year)|(0.213)|(0.111)|(0.039)|(0.048)|(0.053)|(0.061)|
|Minimum Wage (% of average|-1.720**|-1.471***|0.182*|0.144|-0.829***|-0.842**|
|<br>wage in industry & services)<sup>a</sup><br>|(0.674)|(0.395)|(0.103)|(0.112)|(0.292)|(0.376)|
|_NO_MINWAGE_: the country<br>d t h ii|-2.468*|-0.890|1.058***|1.049**|-0.692|-0.991|
|oes no ave a mnmum wage|(1.526)|(1.167)|(0.320)|(0.534)|(0.679)|(0.871)|
|log GDP per capita, PPP USD|<br>-2.854|<br>-8.352**|<br>-2.855**|<br>-4.309***|<br>-19.053***|<br><br>-19.977***|
|(annual average, lagged 1 year)|(6.385)|(4.178)|(1.276)|(1.509)|(2.402)|(2.317)|
|Real GDP Growth, y-o-y,|0.094|0.447***|0.071|0.087|-0.505***|-0.496***|
|<br>quarterly data lagged 1 quarter|(0.113)|(0.162)|(0.074)|(0.070)|(0.064)|(0.104)|
|<br>_LMP_ACTIVE_: Active labor|||<br>-7.158***|<br>-6.865***|<br>-26.202***|<br><br>-26.165***|
|market measures spending, %<br>GDP per percentage point of|||(2.487)|(2.077)|(5.626)|(6.533)|
|unemployment (lagged 1 yr)|||||||
|_LMP_PASSIVE_: Defined in the|23.538***|25.798***|||18.609***|17.967***|
|same way as_LMP_ACTIVE_|(8.589)|(4.380)|||(5.178)|(5.670)|
|_UBSA_(defined in Table 4),<br>|-0.488***|-0.416***|||||
|lagged 1 year|(0.141)|(0.074)|||||
|Union Density,|0.078**|0.091***|0.032***|0.031***|0.114***|0.112***|
|% of employees|(0.037)|(0.023)|(0.009)|(0.010)|(0.017)|(0.021)|
||0057|0098|0009|0037|0438***|0458***|
|Population with Immigrant|.|.|.|.|.|.|
|Background, %|(0.184)|(0.104)|(0.036)|(0.040)|(0.091)|(0.085)|
|Root MSE|1.5150|1.8328|0.8655|0.9444|1.774|1.834|
|R-squared|0.8937|0.9518|0.8912|0.8704|0.8462|0.8356|
|<br># obs.[# countries]|34|[12]|34|[12]|34|[12]|
||Descriptive<br>|statistics on d<br>|ependent va<br>|riables<br>|||
|Mean|5|.52|9|.40||7.47|
|Std. Dev.|6|.50|2|.09||3.52|
|Min||0.4|6|.0||2.6|
|Max|2|6.9|1|4.3||18.8|

_Notes:_ Countries covered: (A) with a national minimum wage: FR, BE, UK, IE NL; (B) without a national minimum wage: AT, CH, DE, DK, FI, NO, SE.<sup>a</sup> Countries without a minimum wage assigned sample mean. *, **, *** - coefficient is significantly different from zero at 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 ( _Stata_  simultaneous estimates with clustered robust standard errors have been applied after fitting linear models by OLS).

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