CASE Policy Briefs, Eastern Europe, Caucasus and Central Asia, informal employment, Institutional reforms, Labor market, social policy and social services, Russia, shadow economy, Ukraine

Tax wedge, labor market and the shadow economy - examples of Russia and Ukraine.

According to various authors, by the beginning of this century Ukraine’s shadow economy was estimated to be around 40‐50% of the official economy, one of the highest levels in Europe. The estimates for Russia show similar results (around 40% of GDP). These figures suggest that in both countries around 30‐40% of total employment is located outside the registered economy.
In order to curb this growing problem both governments introduced a series of tax and social security payment reforms between 1998 and 2004.