Labor Informality Study

Project Description:

The project aims to collect detailed data of the population of Tbilisi, in order to study the behavior of people here in the labor market, and examine how attitudes toward risk, confidence, educational level, previous experience, family size and other characteristics affect individuals’ behavior. The survey and experiments are carried out by PMC Research Center (PMC RC) in partnership with the International School of Economics at Tbilisi State University, the University of Bologna, the University of Bonn and Maastricht University with the financial support of Volkswagen Foundation and the Institute for Study Labor (IZA).

The survey and experiments will be based on the participation of 600 individuals, who are selected based on random sampling. During the sessions, participants fill out a survey questionnaire and take part in the experiments/games. As an incentive to participate in the study, all participants who complete the survey questionnaire receive monetary compensation in the amount of 20 GEL (per person). In addition, participants who take part in the games and experiments can earn up to an additional 210 GEL. Games and experiments are designed so that everyone can participate regardless of prior knowledge. The amount of money earned by participants depends on his/her and other participants’ choices.

Active participation in the survey is very important for the project. As a result of the survey and experiments, a new data set will be collected which will provide more detailed information on the Tbilisi population. The data is collected for labor market research purposes.

This project is a continuation of a bigger study on labor informality in Georgia funded by the Volkswagen Foundation and implemented by IZA. At the first stage of the study, a large survey was conducted focused on collecting information on labor and informality. This survey was conducted in 2012 and included residents from Tbilisi, as well as other urban and rural settlements of Georgia.

In the second (current) stage of the study, the sample of the city of Tbilisi chosen for the first survey is re-interviewed. The survey is complemented by various experiments that help to ascertain the microeconomic behavior of the respondents in the labor market. By generating a panel data set for residents in Tbilisi and complementing this data set with rigorously collected experimental evidence on behavioral traits, the study will fuel research on the intersection of behavioral traits and labor market outcomes at the frontier of the field.

As part of the study, several research papers about informal employment will be produced using the information collected in the first and second stages. In particular, the goal will be to develop studies on informal employment in agriculture, on risk attitudes and informal employment as well as a comparative study of risk attitudes in Georgia, Russia and Ukraine and how they affect labor market outcomes.