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Estimation of Undisclosed Household Earnings Based on the Pissarides-Weber Model Modification

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  • Lyudmila Nivorozhkina
  • Sergey Arzhenovskiy
  • Svetlana Galazova

Abstract

Purpose: The issue of undisclosed household earnings prevalence and volume quantitative characteristics in Russia is considered in this article. Design / Methodology / Approach: The undisclosed earnings’ prevalence econometric estimate was carried out on the panel data of the “Russian Monitoring of the Economic Situation and Health of the Population of the Higher School of Economics” (periods from 2000 to 2017) based on the Pissarides-Weber model modification, which describes the behavior of the consumer household taking into account undisclosed earning on the one hand and the relationship between income and consumption on the other hand. Findings: The households share estimates that derive undisclosed earning and the undisclosed earning share showed that they were declined during the period under review, and their contribution to poverty and inequality was indicated. Practical Implications: The presented results are important for adjusting the social and economic state policy, considering the undisclosed earnings’ impact on the population well-being level. Originality / Value: For the first time, an econometric assessment of the undisclosed earnings of the population was carried out using microdata covering a long period of time, the trends that indicate a decrease in the prevalence and volume of undisclosed earning among Russian households during the study period have been revealed.

Suggested Citation

  • Lyudmila Nivorozhkina & Sergey Arzhenovskiy & Svetlana Galazova, 2020. "Estimation of Undisclosed Household Earnings Based on the Pissarides-Weber Model Modification," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(4), pages 635-646.
    • Handle: RePEc:ers:ijebaa:v:viii:y:2020:i:4:p:635-646
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    References listed on IDEAS

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    1. Lindsay Tedds, 2010. "Estimating the income reporting function for the self-employed," Empirical Economics, Springer, vol. 38(3), pages 669-687, June.
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    3. Milton Friedman, 1957. "The Relation between the Permanent Income and Relative Income Hypotheses," NBER Chapters, in: A Theory of the Consumption Function, pages 157-182, National Bureau of Economic Research, Inc.
    4. Pissarides, Christopher A. & Weber, Guglielmo, 1989. "An expenditure-based estimate of Britain's black economy," Journal of Public Economics, Elsevier, vol. 39(1), pages 17-32, June.
    5. Murashov, Yaroslav & Ratnikova, Tatiana, 2017. "The dynamics of unrecorded income of Russian households," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 46, pages 30-54.
    6. Tufan Ekici & Mustafa Besim, 2016. "A Measure of the Shadow Economy in a Small Economy: Evidence from Household-Level Expenditure Patterns," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62(1), pages 145-160, March.
    7. Mike Brewer & Cormac O'Dea, 2012. "Measuring living standards with income and consumption: evidence from the UK," IFS Working Papers W12/12, Institute for Fiscal Studies.
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    More about this item

    Keywords

    Households; undisclosed earning; disposable resources; expenditure; consumption; inequality; poverty.;
    All these keywords.

    JEL classification:

    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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