INFORMAL SECTOR OF THE ECONOMY: CONCEPT AND EMPIRICAL ANALYSIS WITHIN GENERAL EQUILIBRIUM FRAMEWORK

Abstract

Empirical evidence suggests that the informal sector is the important, and even the main source of employment in many countries, mainly developing and poorly developed. Work in the informal sector represents the only source of income for the population in countries with high poverty levels. At the same time, the expansion of this sector has a negative impact on income level throughout the economy. Therefore, the study of macroeconomic consequences of the informal sector is of both research and empirical interest. The present study reviews the existing definitions of the informal sector, as well as foreign experience of elaborating general equilibrium models with informal sector. This review will be useful for developing a similar model for Russia.