Shadow Economy in the Countryside of Russian Regions

Abstract

The paper studies the correlation of the scope of the shadow economy and agriculture and validates the statement that growth in the share of the agricultural sector in GDP leads to growth in the shadow economy. The results of testing the statistical correlation of the scope of the shadow economy in the Russian regions and indicators reflecting the agricultural scope are presented (the share of the rural and urban population in the total population, the share of agricultural production in GRP). The research methodology includes an analysis of the approximation curves constructed based on scatter diagrams using the indicator of the share of the urban population and the logarithm of shadow sector indicators. Russian Federal State Statistics Service data and the authors’ calculations of the scope of the shadow economy in Russian regions for 2002–2013 are used. Overall, the authors confirm the hypothesis on existence of a direct correlation between the scope of the shadow sector and share of agriculture in the economy. A noticeable correlation between the scope of the shadow economy in regions with the share of the rural population and a moderate correlation with the share of agriculture, hunting, and forestry in the GRP is revealed. A tendency toward an increase in informal employment in nonagricultural types of activity is specified. It is concluded that population migration from the countryside to cities, and increase of the urban population will contribute in the future to an increase in the scope of the shadow economy in the least urbanized regions and a decrease thereof for regions with a medium level of urbanization.