An analysis using similar specifications as before suggests that the association of informality and poverty depends on the type of informal job. Columns 1 and 2 in Table 12 show that informal workers are more likely to be in the bottom quintile of the per capita household income distribution, even after controlling labor market characteristics. However, the statistically significant coefficient becomes insignificant and substantially smaller once we restrict the sample to salaried workers and control for other job characteristics such as firm-size (column 3).

These results show, again, a fundamental difference between salaried and self-employed informal workers. Like in the case life satisfaction (see Table 11), when excluding self-employed workers from the sample, informal employment is not statistically associated to lower household income. Our results suggest that all informal workers have lower wages than formal workers (see Table 8), all else equal, but salaried informal workers are not necessarily poorer at the household level. On the other hand, self-employed informal workers are associated with certain negative consequences such as lower subjective well-being, and dissatisfaction with pay, all of which together with lower wages, may lead to a situation that leads (or stems) from household poverty.

# **V. Conclusions**

In this paper, we utilize multiple data sources on informal employment in Russia and observe a long-term increase in informality from the early 2000s through 2016, with a short period of stability or even decline in the second half of the 2000s. Encouragingly, this trend appears to be consistent across different data sources and definitions of informal employment, including the official measure of informal employment monitored by Rosstat, which is presented alongside our estimates for comparison purposes.

We assess the comparability of sources in terms of the measurement of informal employment, and maintain a legalistic definition of informal employment throughout all data sources, which is in line with the majority of Russian literature and deemed more appropriate for transition economies. Throughout the analysis for this paper, in most cases the results are qualitatively consistent across the three surveys under study.<sup>23</sup> Importantly, we find that a statistically significant wage gap between formal and informal workers starts to be statistically significant around mid 2000s and has widened since. Hourly wages of informal and formal workers started out at around parity and maintained similar growth rates through the mid 2000s, but a clear divergence is observed after that. Moreover, while real wages

> 23 The main exception to this is that we find inconsistent results using the LiTS when measuring the impact of job and life satisfaction. Specifically, we find empirical results that are opposite from those obtained using the RLMS. For example, results from the LiTS suggest that informal workers are more satisfied with their jobs and their lives. Given that the RLMS includes more information to explore other aspects of informality, some of which are used to explain the differences in satisfaction levels, these <u>are the results we report here. We note however that the discrepancy with the LiTS remains an unresolved puzzle.</u>

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