Risks and benefits of economy digitalization in the shadow labor market (case of Uzbekistan)

Digital economy: theory and practice

The digital economy is a reality of today rapidly expanding its horizons, providing innumerable opportunities for economic development. The introduction of the digital economy in the modern world requires not only finances and time, but also governments, people and, accordingly, specialists ready for this; the relevance of digitalization undoubtedly concerns the problem of employment. The purpose of this article is to determine the impact of the digital economy on shadow employment and the share of the shadow sector as a whole. The main purpose of this paper is to study the impact of increasing R&D (Research and Development) expenses and the prevalence and availability of the Internet among the population on the share of the shadow labor force and the shadow economy as a whole. Analysis and synthesis of diverse views and generalization of statistics make it possible to make judgments and conclusions regarding the benefits and risks of digitalization for the shadow economy. Study of a number of advantages and components of information technology and their development using macroeconomic indices for the period of 2000–2020 by means of OLS (Ordinary Least Squares) regression of the data obtained from the open World Bank database and calculated by the MIMIC (Multiple Indices Multiple Causes) model for Uzbekistan shows both favorable and negative effects on shadow labor employment; this in turn allows us to develop necessary legal and regulatory and technical recommendations to reduce shadow employment in the to subsequent parts of this study. The results of the MIMIC model include estimates of the size of the shadow economy in Uzbekistan for the period from 2001 to 2020. According to the data obtained, there is a negative relationship between the shadow sector and the country’s R&D expenses, which gives hope for a decrease in the growth rate of the shadow economy. However, an increase in shadow employment provokes deep thinking and encourages further research into this problem.