Eliciting permanent and transitory undeclared work from matched administrative and survey data

Elek, Péter and Köllő, János (2016) Eliciting permanent and transitory undeclared work from matched administrative and survey data. Budapest working papers on the labour market (2016/5). Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences, Budapest. ISBN 978 615 5594 45 8

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Abstract

We study the undeclared work patterns of Hungarian employees in relatively stable jobs, using a panel dataset that matches individual-level self-reported Labour Force Survey (LFS) data with administrative data from the Pension Directorate for 2001–2006. We estimate the determinants of undeclared work using Heckman-type random-effects panel probit models, and develop a two-regime model to separate permanent and transitory undeclared work, where the latter follows a Markov chain. We find that about 6 per cent of workers went permanently unreported for six consecutive years, and a further 3-4 per cent were transitorily unreported in any given year. By simulating the permanent and transitory components of undeclared work, we examine the implications for health and pension eligibility.

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