Do informal workers make an underclass? An analysis of subjective social status

This article addresses the elaboration of a new approach to informal employment research based on analyzing subjective social status. In spite of numerous studies conducted over the past 40 years many questions still exist in the field of informal employment research. The heterogeneous nature of activities incorporated into the concept of “informality” defines the ambiguity of its impact on the economy and society. Thus, little is actually known about the socioeconomic position of informal workers and the nature of informal employment. Is informality a kind of stratifying mechanism embedded in the social structure that changes the position of the informally employed, or not? The so-called “direct” approach based on analyzing levels of income was considered to be an inappropriate framework and thus indicated that the consequences of informal employment need to be further analyzed together with indirect – subjective – measures. The present paper discusses methodological issues and presents results concerning the subjective social position of informally employed workers in contrast to formal workers, the unemployed, and the economically inactive population. The study was carried out on the basis of a large nationally representative panel: the Russia Longitudinal Monitoring Survey of the Higher School of Economics (RLMS-HSE) for 2000-2010. The existence of three-tier informal employment in Russia is revealed with self-employment being better off than formal employment and informal wage and salary work. No significant difference between informal wage and salary work and formal employment in terms of subjective social status is found. Thereby, one can suppose that the difference between types of employment is not embedded in the social structure at all. Taken as an indirect indicator of the quality formal employment in Russia, this could point to the great weakness of labor market institutions and the idle channels of social mobility of formal employment in Russia.