The informal sector in the structure of the national economy: Simulation and evaluation

Abstract

Research into the shadow economy of a country has scientific and practical value. Any state is interested in evaluating the size of its shadow economy, as it affects the goals and priorities of the country’s development. This study presents a model for evaluating the shadow economy in the Russian Federation. The authors developed and analyzed an approach to measuring the shadow economy based on factor analysis and a MIMIC model. The study features factor analysis of official statistics for Russia over the period 1992 to 2019, with more than 150 indicators characterizing different spheres of the life of the country. The authors determined the factors affected by Russia’s shadow economy, built a MIMIC model on this basis, and estimated its size. Assessing the size of shadow activity is important for analyzing economic development and the impact of government regulations on it.