Limiting informal economy in the context of business environment regulations. An analysis of -young- European Union members

Most of the studies undertaken in the direction of the underground economy identify fiscal pressure and corruption as the main determining forces of this phenomenon. The present study tries to address other factors as potential drivers of the unobserved economy through variables that summarize the conditions that characterize the business environment. For this purpose we will consider the situation of eight member states of the European Union, states that joined EU after 2000. Using panel data we will investigate the link between regulations and the informal economy over the period 2000-2015. The paper is structured as follows: firstly we will provide a short introduction regarding the issue of the underground economy, followed by a review of the scientific literature on this topic. In the third section, the research methodology will be detailed along with the variables and data used, specifying their collection sources. The last two sections are dedicated to the presentation of the main results and to expose some conclusions and proposals for the limitation of the informal economy in the context of regulations specific to the business environment.