MONGOLIA'S INFORMAL SE.CTOR Notes 55 6.The surveys were conducted in cooperation with the SSO and the Ulaanbaatar City Administration.

# 7.All references to Mongolian laws in this report are based on unofficial (informal?) translations.

8.Another approach to measuring the size of the "unofficial economy" in formerly socialist countries that has received some attention of late is based on the level of electric power consumption. The technique follows from the belief that electric power consumption is frequently a better measure of economic activity than official GDP, and the recognition that in most former socialist countries the decline in electric power consumption has been much smaller than the decline in official GDP. (Dobozi and Pohl 1995.) The macro-electric approach views the difference as reflective of the size of the unofficial economy. (Kaufinann and Kaliberda 1996.) The macro-electric approach is not appropriate for Mongolia, primarily because the well-known difficulties of the energy sector have made electric power deliveries a misleading indicator of demand. Indeed, if one applied the macro-electric approach to Mongolia, one would arrive at an estimate that Mongolia's unofficial economy was _negative_ 24% of overall economic activity in 1996. (Between 1989 and 1996, electric power consumption fell by 47%, whereas official real GDP fell by only 13%. Statistics are from SSO 1997.) For this reason, the macro-electric approach will not be presented in the text.

9.Political subdivisions of cities and provinces, respectively.

# I O.Formerly known as a "Labor Exchange."

1 I.The 0.5% contribution is a portion of a larger contribution covering pensions, disability, etc.

12.The law also provides for a minimum benefit of 75% of the minimum wage.

13.See, for example, Beleva (1995), Earle (1995), Commander, et al (1995). For an opposing view, see Boeri (1994).

14.There is some evidence from other transition countries that those who have exhausted their benefits tend to stop reporting to labor office. See Boeri (1994) for Eastern Europe, and OECD (1993) for Poland.

15 .These trends are similar, albeit at smaller magnitudes, for the rest of Mongolia, consistent with the notion that the informal sector is primarily an urban phenomena. Indeed, it should be noted that Ulaanbaatar is home to 27% of Mongolia's population, 37% of the "not employed," and only 19% of the officially unemployed.

I 6.The relationship between the three groups Employed, Not-Employed, and Able-bodied People of Working Age is not exact. Students over the age of sixteen are not included in either the employed or the not-employed categories, and the number of people employed may include working children and working pensioners. Indeed the - number of working pensioners and working children has nearly doubled since 1990 if they were netted out of total employment, the decline in officially employed people would be even larger.

1 7.For Mongolia as a whole the numbers are: unemployment as registered at the EROs was about 55,400 at the end of 1996, whereas the census of December 1996 counted 227,100 as not-employed, 128,500 of which "without any reason." 1 8.It should be noted that such a drastic change in labor force participation in such a short period of time would be - highly unusual the period during which the US labor force participation rate changed by an equal percentage was thirty years.