ABSTRACT
The shadow economy leads to direct monetary losses for the state and indirect, complex and serious societal consequences through unhealthy market competition, loss of entrepreneurial innovativeness, structural corruption, unsafe working conditions and, often, a poorer quality of products and services. The shadow economy overwhelms the positive economic impact that migration can produce, since the human capital of employees is not used or developed in a sustainable manner. In Russia, recorded immigration is a small part of the total inflow of immigrants, and a substantial proportion of migrants work in the shadow economy. The dependence of a country on the workforce in the shadow economy has profound significance for its political and societal development. As a societal force, the shadow economy is similar to corruption, which can initially be used to enter a specific market, but which becomes more problematic and costly over time as the market position becomes entrenched. The competition in the corrupted market can become increasingly hostile as those who got into the markets earlier using the available unofficial networks ‘try to turn against those same networks in order to reinforce their hegemonic positions’ (Sajó 2003: 174).
