Undeclared Work in Ukraine: Evidence from the 2020 Student Survey

Анотація

This paper presents the results of the first of its kind survey on the undeclared work in Ukraine, performed by the students of the National University of Kyiv-Mohyla Academy. This is a pilot study based on 133 observations collected in March-April of 2020 in Ukraine. The sample mostly consists of young individuals residing in urban areas, single, without children, and more females as compared to males. To work undeclared means to have any paid activities that are lawful but not declared to the public authorities. The paper discusses who works undeclared in Ukraine, the educational attainment, the employment status and the economic activity of undeclared workers. Almost half of the respondents estimate the share of the population of Ukraine who perform undeclared work at the level of 43 per cent. Almost all admit knowing other undeclared workers. The risk of being detected for undeclared work is perceived to be low by almost half of the interviewees. The most popular undeclared activities are tutoring, sales, marketing, working as a waiter/waitress, an analyst, an employee in consultancy and construction. The income from formal work is observed to be lower than from undeclared work. The mean net income for formal work is under UAH 5,000 per month, while the mean net income for undeclared work is between UAH 5,000-10,000. The most common reasons for performing undeclared work are willingness to earn more, easiness to find a job, and avoiding paying taxes. Finally, the paper presents the list of recommendations to tackle the undeclared work in Ukraine, the most popular of which were as follow: to reduce the income tax, to increase fines for undeclared work, to introduce penalties for undeclared work not only for employers but also to employees, to strengthen administrative responsibility of employers, and to ease the tax system. JEL classification: E26, J46 Manuscript received 30.04.2020

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