upturns and downturns in the rate of informal employment across all surveys. In other words, it is changes in the probability to be an informal worker, given certain attributes, what explains changes in informality rates. Different surveys give different results about the changes in these “beta” effects, but there is a common trend across all surveys: the probability of being informal has increased among those with only basic education.<sup>18</sup> Interestingly, one of the few demographic characteristics that have changed rapidly over the period is the proportion of workers with tertiary education, this effect has partially compensated the growing probability of informal employment among those without tertiary education. In other words, had the share in tertiary education not increased, the rate of informality would have grown even more.

We conclude that the evolution of informality rates over the past decade cannot be attributed to changes in the sectoral or demographic composition of the labor force. Rather, it appears that incidence of informality has been going up across all economic sectors and particularly among those without at least some tertiary education (the majority of the labor force). This leads us to conclude that informal employment is a quite pervasive phenomenon in Russian labor markets and it cannot be associated to economic sector or population specific influences.

# **_Is migration affecting informal employment in Russia?_**

There has been recent concern about immigrants in Russia and their labor market impact. The flow of these migrants, mainly stemming from Central Asian countries, increased until the economic crisis hit the region [see (Ryanzantsev, 2016)]. Given the attention to the link between rising informality and immigrants, we use the RLMS to investigate their personal and job-related characteristics and whether migrant workers -defined in this survey as non-Russians- are more likely to be informal.<sup>19</sup> 18 For instance, according to RLMS data -on average and after controlling for other personal characteristics- people with higher education are 15.7 percentage points less likely to be informal than those with basic education in 2010. By 2016 those with some tertiary education are 24.2 percentage points less likely to be informal than those with basic education. Other surveys show qualitatively similar results regarding education. These are “conditional” probabilities, in other words, the probability to have an informal job, keeping all the other observable characteristics (e.g., sex, age and location) constant. Given that these personal characteristics are correlated with education, the “unconditional” probabilities can be different. In fact, according to RLMS data, the rate of informal employment has increased for all education levels between 2001 and 2016. However, the rates of growth have differed. For those with less than secondary education, the rates of informality went from 6.9 to 13.6 percent between 2001 and 2016: an 87% increase. Those with secondary went from 12 percent to 21.2 percent: a 77% increase. On the other hand, those with some tertiary went from 10.9 to 15.3 percent, and those with college, from 6.6 to 8.0 percent, that is, 40% and 21.2% growth respectively. Having post-secondary education has prevented workers from becoming informal.

19 It should be noted that this is the most expansive definition of migrants we can think of using RLMS. It refers to non-Russians in general, independently of birthplace or citizenship. If using a much more fine-tuned definition of migrants (i.e., living in a place that is not where one was born, having been born outside Russia, and having lived there less than 10 years), the proportion of migrants ranges between just 1% and 1.6% of employment in RLMS for the period 2010-2016. This is similar to the data from the LFS which contains a straight question about citizenship. Using LFS, the proportion of migrants within employment ranges between 0.2 and 0.3 percent for the same period. These latter numbers underscore the point often made that these surveys fail to capture illegal migrants either because respondents mislead the surveyors or because the sampling design fails to capture this population <u>group.</u> 15/67 Informal Employment and Worker’s Wellbeing in Russia