Tax wedge, labor market and the shadow economy - examples of Russia and Ukraine

In Russia and Ukraine around 30-40% of total employment is located outside the registered economy. This has negative yet important consequences both for public finances and related individuals. The former suffer from lower tax incomes, the latter lack access to important elements of the social security system. Any future policies designed to curb shadow employment in either of these two countries should aim to broaden general employment opportunities for unskilled workers.