# **Table 6 Macro determinants of the shares of informal employees in the extended labor force. Western European and Nordic countries and Europe at large, 2004-2009** ( _alternative panel data estimates)_

||Wester|n and Norther|n Europe|Eu|rope (all reg|ions)|
|---|---|---|---|---|---|---|
||[1]|[2]|[3]|[4]|[5]|[6]|
|Employment Protection|2.174*|7.998***|0.936|-2.652***|-1.551|-1.813|
|Legislation Strictness, v. 2|(1.274)|(0.693)|(2.082)|(0.898)|(0.960)|(1.309)|
|Government effectiveness|-8.207***|-12.765***|-4.645**|-5.355***|-3.922**|-1.985|
|(in [3] – [6] lagged 1 year)|(2.010)|(0.892)|(2.350)|(1.457)|(1.575)|(1.211)|
|Business Freedom|-0.117***|-0.191***|-0.063**|-0.072**|-0.066**|-0.037|
||(0.024)|(0.038)|(0.032)|(0.030)|(0.026)|(0.028)|
|Tax Wedge on low wage|-0.684***|-0.801***|-0.541***|-0.611***|-0.517***|-0.400***|
|earners, % (lagged 1 year)|(0.093)|(0.032)|(0.163)|(0.067)|(0.087)|(0.108)|
|_MINWAGE:_minimum wage<br>(% of average wage in industry|-0.609**|-1.849***|-0.661**|0.372***|0.253***|0.401**|
|<br>& services)<br>_MINWAGE*UNION_DENSITY_|(0.246)|(0.107)|(0.311)|(0.072)|(0.094)|(0.170)<br>-0.013*<br>(0.007)|
|_UNION_DENSITY_,|0.074***|0.127***|0.045|0.058***|0.012|0.536*|
|% of employees|(0.022)|(0.006)|(0.049)|(0.020)|(0.029)|(0.279)|
|_NO_MINWAGE_: the country<br>|-0.165|-1.817***|-2.557|-2.764***|-1.353|-3.790*|
|does not have a minimum wage|(0.452)|(0.343)|(2.353)|(1.059)|(1.759)|(2.295)|
|_lnGDP__ _per_capita_, PPP USD|-4.959|-3.085**|-1.254|4.108***|3.419***|5.169***|
|(annual average, lagged 1 year)<br>_IMMIGR* log_GDP_ _per capita_|(3.275)|(1.473)|(6.094)|(1.058)|(1.293)|(1.382)<br>-0.219**<br>(0.093)|
|_IMMIGR:_Population with|||||||
|<br>immigrant background, %|-0.310***|0.124***|-0.103|0.081*|0.060|1.950**|
||(0.077)|(0.046)|(0.132)|(0.046)|(0.072)|(0.859)|
|Real GDP growth, y-o-y,|<br>0.279***|<br>0.286**|<br>0.185**|<br>0.092|<br>0.131***|<br>0.132***|
|quarterly data lagged 1 quarter|(0.039)|(0.114)|(0.084)|(0.057)|(0.046)|(0.043)|
|<br>_LMP_PASSIVE_: Passive labor|9.253**|28.345***|12.591*||||
|market measures spending, %<br>GDP per percentage point of<br>|(4.368)|(0.755)|(7.748)||||
|unemployment (lagged 1 yr)|||||||
|<br>_UBSA_(defined in Table 4),|-0.301***|-0.481***|-0.342***||||
|lagged 1 year|(0.047)|(0.053)|(0.104)||||
|Gini index||||0.262***|0.119||
|(lagged 1 year)||||(0.068)|(0.116)||
|Country-level random eff. s.d.|||3.066|||3.191|
|Residual s.d.|||0.918|||1.278|
|LR test vs. a model without|||||||
|random effects,_p_-value|||0.0001|||0.0000|
|Root MSE|0.8500|1.2822|0.6209|2.1074|2.7608|0.9271|
|R-squared|0.9788|||0.8645|||
|# obs.[# countries]|34[12]|34[12]|34[12]|67[27]|67[27]|67[27]|

_Notes:_ [1] and [4] are Prais-Winsten regressions (See Davidson and MacKinnon (1993): 343-351) with country level heteroscedasticity and country-specific AR1 error correlation within panels. [2] and [5] are populationaveraged panel-data models with semi-robust SE‘s clustered on countries (see Zeger et al., 1988); in these models, the estimates are obtained by averaging country-level random effects (possibly correlated with the Xs) across population. [3] and [6] are mixed-effects linear models with country-level random effects (possibly correlated with the Xs), see Section 2 and Greene (2008: 233-238) for details. Countries covered: For models [1] – [3], see Notes to Table 5. For models [4] – [6]: EU-27 (except for Cyprus, Luxembourg, and Malta), Norway, Russia, and Ukraine. *, **, *** - estimates significant 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.

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