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Shadow Economies: Size, Causes, and Consequences

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  • Dominik H. Enste
  • Friedrich Schneider

Abstract

Using various methods, the size of the shadow economy in 76 developing, transition, and OECD countries is estimated. Average size varies from 12 percent of GDP for OECD countries, to 23 percent for transition countries and 39 percent for developing countries. Increasing taxation and social security contributions combined with rising state regulations are driving forces for the increase of the shadow economy, especially in OECD countries. According to some findings, corruption has a positive impact on the size of the shadow economy, and a growing shadow economy has a negative effect on official GDP growth.

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jel.38.1.77
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Bibliographic Info

Article provided by American Economic Association in its journal Journal of Economic Literature.

Volume (Year): 38 (2000)
Issue (Month): 1 (March)
Pages: 77-114

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Handle: RePEc:aea:jeclit:v:38:y:2000:i:1:p:77-114

Note: DOI: 10.1257/jel.38.1.77
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  1. Klovland, Jan Tore, 1984. " Tax Evasion and the Demand for Currency in Norway and Sweden. Is There a Hidden Relationship?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 86(4), pages 423-39.
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  7. Pranab Bardhan, 1997. "Corruption and Development: A Review of Issues," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1320-1346, September.
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