Polish Households' behavior in the Regular and Informal Economies

This paper analyzes characteristics of the informal economy in Poland in the context of transition, using a specific survey carried out in the framework of the classic Labour Force Survey, conducted by the Polish National Statistical office (GUS), in 1995. The participation probabilities of three types of informal activities (working, buying and hiring) are discussed. Their interdependencies are analyzed in the light of the hypothesis of network or neighborhood effects. The impact of a household's participation in informal markets on its regular consumption is estimated by imputing the probability of its informal activity in the consumption surveys and panels. Such participation does significantly influence more than half of household's expenditure on goods and services. Moreover, the participants of the informal economy distinguish themselves by higher individual full prices (integrating both monetary and non-monetary constraints and resources).