# **Table 3B Macro determinants of the shares of informal employees, informal self-employed, and  unemployed (incl. discouraged)  in the extended labor force. Eastern and Southern EU members, 2004-2009**

_(seemingly unrelated regressions)_

||(%|of labor force|Dependent<br>extended to|variables<br>include disco|uraged work<br>|ers)<br>|
|---|---|---|---|---|---|---|
||Informal<br>1|employees<br>(robust s<br>2|Informal s<br>Estimated c<br>tandard error<br>1b|elf-employed<br>oefficients<br>s adjusted for<br>2b|Unemp<br>disc<br>clustering o<br>1|loyed and<br>ouraged<br>n countries)<br>2|
||[a]|[a]|[]|[]|[c]|[c]|
|Employment Protection|7.717***|7.717***|6.893***|6.893***|-2.213|-2.213|
|Legislation strictness, v. 2|(1.073)|(1.077)|(1.811)|(1.811)|(4.666)|(4.666)|
|Government Effectiveness<br>|-1.411**|-1.411**|-2.448<sup>(</sup>*<sup>)</sup>|-2.448<sup>(</sup>*<sup>)</sup>|-3.492|-3.492|
|(lagged 1 year)|(0.596)|(0.598)|(1.524)|(1.524)|(2.698)|(2.698)|
|Investment Freedom|-0.099***|-0.099***|-0.168**|-0.168**|0.025|0.025|
||(0.028)|(0.028)|(0.069)|(0.069)|(0.155)|(0.155)|
|Trade Freedom|||-0.282***|-0.282***|-0.122|-0.122|
||||(0.059)|(0.059)|(0.174)|(0.174)|
|Tax Wedge on low wage|0.189***|0.189***|-0.270**|-0.270**|-0.325**|-0.325**|
|earners, % (lagged 1 year)|(0.071)|(0.071)|(0.109)|(0.109)|(0.146)|(0.146)|
|Minimum Wage (% of average|0.588***|0.588***|||0.512***|0.512***|
|wage in industry & services);|||||||
|{1} assigns sample mean to IT<br>_ITALY_ (does not have a|(0.052)<br>-2.693***|(0.052)|||(0.168)<br>4.580|(0.168)|
|minimum wage)|(0.715)||||(3.569)||
|log GDP per capita, PPP USD<br>l ld 1|4.823***|4.823***|8.350***|8.350***|-2.850|-2.850|
|(annua average, agge year)|(0.504)|(0.506)|(0.962)|(0.962)|(3.372)|(3.384)|
|Real GDP Growth, y-o-y,|0.109**|0.109**|0.039|0.039|-0.186***|-0.186***|
|<br>quarterly data lagged 1 quarter|(0.052)|(0.052)|(0.052)|(0.052)|(0.054)|(0.054)|
|Union Density,|-0.361**|-0.361**|-0.399***|-0.399***|0.062|0.062|
|% of employees|(0.035)|(0.035)|(0.058)|(0.058)|(0.122)|(0.122)|
|UI spending, %GDP per perc.|-72.23***|-72.23***|-75.73***|-75.73***|43.61|43.61|
|point unempl. (lagged 1 year)|(8.437)|(8.467)|(21.636)|(21.636)|(48.80)|(48.97)|
|ALMP spending, %GDP per<br>|||||-76.33*|-76.33<sup>(</sup>*<sup>)</sup>|
|percentage point unempl.<br>|||||||
|(lagged 1 year)|||||(46.45)|(46.61)|
|<br>Minority population (native),|0.220***|0.220***|-0.199**|-0.199**|<br>0.006|<br>0.006|
|<br>%|(0.030)|(0.031)|(0.085)|(0.085)|(0.137)|(0.137)|
|Population with immigrant|-0.073|-0.073|0.298***|0.298***|-0.075|-0.075|
|background, %|(0.055)|(0.055)|(0.116)|(0.116)|(0.259)|(0.260)|
|Root MSE|1.2232|1.2232|2.3602|2.4329|4.1745|4.1745|
|R-squared|0.9477|0.9472|0.8988|0.8988|0.5936|0.5904|
|# obs.[# countries]|30[13]|29 [12]|30[13]|29 [12]|30[13]|29 [12]|
||Descriptive s|tatistics on d|ependent vari|ables|||
|Mean|4.92|4.99|10.89|10.60|12.58|12.50|
|Std. Dev.|4.09|4.15|5.89|5.78|4.71|4.77|
|Min|1.2|1.2|3.1|3.1|3.7|3.7|
|Max|18.7|18.7|26.2|26.2|23.0|23.0|

_Notes:_ Countries covered: CZ (2004, 2009); SK (2004, 2006, 2008); PL (2004, 2006, 2008); HU (2005, 2006, 2009); EE (2004, 2006, 2008); LV (2007, 2009); SI (2004, 2006, 2008); BG (2006, 2009); RO (2008); ES (2004, 2006, 2008); PT (2004, 2006, 2008); GR (2005, 2009). Models [1a], [1b], [1c] include also Italy (2006). See Annex 1 for details on the explanatory variables. Constant terms are not reported.

(*) , *, **, *** - coefficient is significantly different from zero 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 ( _Stata_  simultaneous estimates with clustered robust standard errors have been applied after fitting linear models by OLS).

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