Beyond Proxy Indicators: From Indirect to Direct Measures of the Underground Sector in East-Central Europe
International Journal of Economic Development, Volume Six, Number 3, pp. 158-198, 2004
41 Pages Posted: 27 Dec 2015
Date Written: 2004
To evaluate the size of the underground sector, numerous measurement methods have been employed ranging from indirect to direct survey approaches. Evaluating critically the range of techniques available, this paper firstly highlights the growing appreciation that direct rather than indirect measurement methods are more appropriate, reliable and accurate. Following this, attention turns towards the results of a study that has employed such direct survey methods to analyze the underground sector in East-Central Europe, namely the New Democracies Barometer (NDB) Survey. Examining eleven countries in the years 1992, 1994, 1996 and 1998, this reveals not only that underground work is either the most important or second most important contributor to living standards for around a quarter of all households but also that this sphere became more rather than less important to households in the decade after the collapse of the socialist bloc. Moreover, and contrary to the narrative that underground work is a survival practice for those excluded from the formal sphere, it is here shown that households relying on underground work for their livelihoods cope just as well, if not better, measured in terms of their ability to acquire consumer goods, as those reliant on the formal economy in East-Central Europe.
Keywords: Informal sector, household work practices, livelihoods, economic development
JEL Classification: H26, J46, J48, K34, K42, O17
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