Socio-economic Risks and Benefits of Legalizing Shadow Self-employment: Russian Case

Abstract

The article aims to summarize the indicators and results of the pilot projects designed to regulate self-employment in the Russian Federation. The authors assess the impact of the changes in the Russian legislation regarding self-employment regulation on the statistical indicators of the self-employment registration, with a focus on shadow and female self-employment. The main hypothesis is that the established regulatory framework for self-employment does not fully stimulate the legitimization of shadow self-employment. Quantitative assessment and analysis of self-employment indicators was carried out using classical scientific methods of socio-economic research. It is found out that the current self-employment regulation has pros and cons from both perspectives: a self-employed person and the state. The undertaken measures resulted in increased risks and individual responsibility of the self-employed. For citizens, the risks of loss of social guarantees when switching to official self-employment are higher than the number of positive consequences acquired. The results of the project also show that the structural sectoral specificity of the activities indicated at registration intersects very closely with typical female employment preferences. Due to diverse reasons, women occupy a significant share of the self-employed in the “shadow” segment. One of the reasons is that the average income offered in official employment is significantly behind the estimated, expected income in shadow employment. It is concluded that the current regulatory and legal mechanism for legalizing shadow self-employment needs further improvement.