Direct Estimation of Hidden Earnings: Evidence From Administrative Data

60 Pages Posted: 23 Sep 2010 Last revised: 28 Feb 2011

See all articles by Serguey Braguinsky

Serguey Braguinsky

Carnegie Mellon University - Department of Social and Decision Sciences

Sergey Mityakov

Florida State University - Department of Finance

Andrey Liscovich

Harvard University - Harvard Kennedy School (HKS)

Date Written: November 15, 2010

Abstract

We estimate hidden earnings by matching car registries to employers’ records of paid earnings for a panel of individuals and households in Moscow. The identification strategy is based on the idea that reported earnings may be falsified, but car registries are accurate. Hidden earnings comprise over 75 percent of actual earnings of the large majority of car owners, at least twice as high as estimated in previous studies using less direct methods. There is also a lot of heterogeneity across employers. Foreign-owned firms, large firms and state-owned firms in capital-intensive industries report earnings more transparently than do small firms and firms in labor-intensive industries, where actual earnings may be more than five times higher than reported earnings. Differentials of similar magnitude are found in public services, especially among educators. Our findings shed new light on the perceived links between firm ownership, size and productivity in countries with large hidden economies.

Keywords: Hidden Economy, Foreign-Owned Firms, Size-Wage Effect, Corruption

JEL Classification: K42, P37

Suggested Citation

Braguinsky, Serguey and Mityakov, Sergey and Liscovich, Andrey, Direct Estimation of Hidden Earnings: Evidence From Administrative Data (November 15, 2010). Available at SSRN: https://ssrn.com/abstract=1680968 or http://dx.doi.org/10.2139/ssrn.1680968

Serguey Braguinsky (Contact Author)

Carnegie Mellon University - Department of Social and Decision Sciences ( email )

Pittsburgh, PA 15213-3890
United States

Sergey Mityakov

Florida State University - Department of Finance ( email )

Tallahassee, FL 32306-1042
United States

Andrey Liscovich

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

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