IDEAS home Printed from https://ideas.repec.org/a/agr/journl/vxxxiy2024i4(641)p309-322.html
   My bibliography  Save this article

The hidden economy revealed: profiling informal workers through random forest classification

Author

Listed:
  • Maria Cristina GEAMBASU

    (Bucharest University of Economic Studies, Romania)

  • Adriana AnaMaria DAVIDESCU

    (Bucharest University of Economic Studies, Romania)

  • Eduard Mihai MANTA

    (Bucharest University of Economic Studies, Romania)

  • Marina-Diana AGAFITEI

    (Bucharest University of Economic Studies, Romania)

Abstract

The phenomenon of informality, in all three of its forms: envelope wages, dependent workers, and workers without formal contracts, represents a complex aspect of the modern economy, having significant impact on regional development and society. The main objective of this study is to understand this phenomenon in both microeconomic and macroeconomic contexts, exploring the interactions between individual and structural factors that influence the evolution and scale of the informal economy across different regions. While the classical approach typically involves multilevel models to analyse such data, this study employs the Random Forest method due to its ability to handle data complexity and variability efficiently and robustly. The profile of informal workers, regardless of their employment form (no formal contract, envelope wages, or dependent workers), reveals both common traits and notable differences. While all share low fiscal morality, extended social networks, and a general distrust of authorities, they differ significantly in terms of company size, demographics, and political inclination, highlighting the complexity and diversity of informal labour and the need for tailored approaches to address these workers.

Suggested Citation

  • Maria Cristina GEAMBASU & Adriana AnaMaria DAVIDESCU & Eduard Mihai MANTA & Marina-Diana AGAFITEI, 2024. "The hidden economy revealed: profiling informal workers through random forest classification," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(4(641), W), pages 309-322, Winter.
    • Handle: RePEc:agr:journl:v:xxxi:y:2024:i:4(641):p:309-322
    as

    Download full text from publisher

    File URL: http://store.ectap.ro/articole/1802.pdf
    Download Restriction: no
    File URL: http://www.ectap.ro/articol.php?id=1802&rid=157
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Shabeer Khan & Baharom Abdul Hamid & Mohd Ziaur Rehman, 2021. "Determinants of shadow economy in OIC and non-OIC countries: the role of financial development," International Journal of Emerging Markets, Emerald Group Publishing Limited, vol. 18(10), pages 3373-3393, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dada, James Temitope & Ajide, Folorunsho Monsur & Arnaut, Marina & Al-Faryan, Mamdouh Abdulaziz Saleh, 2024. "On the contributing factors to shadow economy in Africa: Do natural resources, ethnicity and religious diversity make any difference?," Resources Policy, Elsevier, vol. 88(C).
    2. Ada Aliaj & Rovena Vangjel, 2023. "Financial Development and Its Impact on the Shadow Economy in Albania," Academic Journal of Interdisciplinary Studies, Richtmann Publishing Ltd, vol. 12, May.
    3. Musa Abdullahi Sakanko & Joseph David & Nurudeen Abu & Awadh Ahmed Mohammed Gamal, 2024. "Financial inclusion and underground economy nexus in West Africa: evidence from dynamic heterogeneous panel techniques," Economic Change and Restructuring, Springer, vol. 57(1), pages 1-20, February.
    4. Baah Aye Kusi, 2023. "Exploring the nonlinear effect of shadow economies on sustainable development in Africa: does the level of financial market development matter?," Journal of Financial Economic Policy, Emerald Group Publishing Limited, vol. 15(6), pages 551-572, October.
    5. Toan Khanh Tran Pham, 2024. "Does government effectiveness moderate public spending on education–shadow economy nexus in ASEAN countries?," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 95(3), pages 761-781, September.
    6. Ridwan, Lanre Ibrahim & Ajide, Kazeem Bello & Cifuentes-Faura, Javier & Al-Faryan, Mamdouh Abdulaziz Saleh, 2024. "Shadow economy implications of financial development in Africa: Do income groups also matter?," Emerging Markets Review, Elsevier, vol. 59(C).
    7. Nguyen, Dinh Trung & Duong, Kim Thanh, 2024. "Financial stress and shadow economy: A global study from a new worldwide database," Finance Research Letters, Elsevier, vol. 60(C).
    8. Wajahat Azmi & Zaheer Anwer & Mohsin Ali & Shamsher Mohamad, 2024. "Competition, stability, and institutional environment: The case of dual banking economies," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(1), pages 609-631, January.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:agr:journl:v:xxxi:y:2024:i:4(641):p:309-322. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Mircea Dinu (email available below). General contact details of provider: https://edirc.repec.org/data/agerrea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.