A Note on Measuring the Unofficial Economy in the Former Soviet Republics

Posted: 2 Jun 2003

See all articles by William Pyle

William Pyle

Middlebury College - Department of Economics

Michael Alexeev

Indiana University Bloomington - Department of Economics; Russian Presidential Academy of National Economy and Public Administration

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Abstract

This note argues that the most commonly used estimates of the size of the unofficial economies in the former Soviet republics are flawed. Most important, they are based on calculations that disregard the variation in unofficial economic activity across space in the pre-transition Soviet Union. In addition, these estimates appear to understate the size of the unofficial economies in these countries. We propose alternative estimates and find that they are more strongly related to the institutional factors commonly used to explain the size of the unofficial sector. Our estimates also show that the size of a country's pre-transition unofficial economy is an important predictor of its size during the transition. This suggests that the size of the unofficial economy is to a large extent a historical phenomenon only partly determined by contemporary institutional factors.

Keywords: hidden economy, transition economies

JEL Classification: O17, P2, P3

Suggested Citation

Pyle, William and Alexeev, Michael V., A Note on Measuring the Unofficial Economy in the Former Soviet Republics. Economics of Transition, Vol. 11, No. 1, March 2003. Available at SSRN: https://ssrn.com/abstract=412822

William Pyle (Contact Author)

Middlebury College - Department of Economics ( email )

Munroe Hall
Middlebury, VT 05753
United States
(802) 443-3240 (Phone)

Michael V. Alexeev

Indiana University Bloomington - Department of Economics ( email )

Wylie Hall 105
Bloomington, IN 47405-6620
United States

Russian Presidential Academy of National Economy and Public Administration ( email )

pr. Vernadskogo, 84
Moscow, 119571
Russia

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