It is a quite obvious and standard conclusion. What seems to be new here however is, that those in shadow sphere are, most probably, the last to gain from the economic upturn and the first to lose when economy start to contract.

**Table 2 - The estimated coefficients of contract and shadow variables on transition from employment to non-employment (from probit model)**

|**Model/variable**|**2003/2004**|**2004/2005**|**2005/2006**|**2006/2007**|**2007/2008**|
|---|---|---|---|---|---|
|Shadow – onlyshadow variable used|0.19951|0.17448|0.15636|0.12734|0.15915|
|Shadow – both variables used|insignificant|insignificant|insignificant|insignificant|insignificant|
|**Contract –only contract variable use**<br>|**d**<br>|||||
|full time, fixed term|0.07527|0.05689|0.05494|0.0507|0.055|
|part time, open term|insignificant|0.01898|0.037|0.0151|0.02276|
|part time, fixed term|0.07776|0.06582|0.0562|0.07629|0.07441|
|Self employed|-0.04458|-0.02622|-0.02733|insiginficant|insignificant|
|**Contract –both variables used**<br>||||||
|full time,fixed term|0.0758|0.05403|0.05331|0.05355|0.05368|
|part time,open term|insignificant|0.01861|0.03671|0.01552|0.02267|
|part time,fixed term|0.07986|0.05371|0.0494|0.09214|0.06817|
|Self employed|-0.04452|-0.0263|-0.02742|insignificant|insignificant|

Source: Author‘s calculations based on CASE_2007 database and LFS databases for years 2003-2008 Notes: Base category for contract variable = full time, open term contract. All coefficients in dF/dX forms i.e. they represent the change in probability resulting from the unit change of independent variable (in case of ―shadow‖ variable) or the change in probability for category X as compared to the case category.

Second, I tried to check whether transition from non-employment to employment is related to increasing probability of having a shadow job. This analysis has also been performed by estimating the series of probit models for each year. The probability of transition to employment between ―t‖ and ―t+1‖ has been a dependent variable and estimated probability of working in shadow employment (―shadow‖) in period ―t+1‖ has been one of the explanatory variables. Apart from that, the same set of standard control variables were used, all for the period ―t+1‖. Here, three versions of the model have been estimated for each year: one in which both the ―contract‖ and the ―shadow‖ variables have been added to the model specification, and two with either of the variables used.

In this case one cannot say that the estimated coefficients of the control variables were as expected as it is not so obvious what the expectations should be. One has to remember that it is not the probability of finding a new job by an unemployed being estimated, but the probability that a given person is a new employee provided she/he is employed at all. So in general it tells more about the changing (tenure/age) structure of employment or job rotation than about job creation. It is, however, perfectly sufficient from the point of view of our task as what we are interested in is the relationship between being a new employee and being in the shadow sphere.

The shadow variables are significant in both models (see Table 3), although the estimated size of coefficients significantly differs. In either case, however, it seems that the probability of being in shadow employment is positively correlated with the fact of being a new employee (or the new self-employed).

It also seems that the strength of this relationship decreased for the entire period analyzed which seems to be an interesting observation. It does not mean that as the labor market kept improving, new workers were hired legally more often. It only means that there was a weaker relationship between the very fact that they are new workers with a high probability to enter