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Shadow Economy: Estimation Methods, Problems, Results and Open questions

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  • Schneider Friedrich

    (Department of Economics, Johannes Kepler University of Linz, Altenberger Str. 69, 4040 Linz, Austria)

  • Buehn Andreas

    (University of Cooperative Education, Bautzen, Germany)

Abstract

This paper presents various methods used for estimating the size of the shadow economy. Each method is evaluated and its strengths and weaknesses are discussed, as well as results each method yields. The purpose of the paper is threefold: Firstly, to demonstrate that there is no single infallible method for estimating the size and development of the shadow economy and results can differ significantly between different approaches. The MIMIC approach, discussed in greater detail, is often used due to its flexibility. Secondly, the paper discusses the very definition of the shadow economy and factors contributing to its growth. Finally, latest estimations of the size of the shadow economies of 143 countries over the period 1996 to 2014 are presented.

Suggested Citation

  • Schneider Friedrich & Buehn Andreas, 2017. "Shadow Economy: Estimation Methods, Problems, Results and Open questions," Open Economics, De Gruyter, vol. 1(1), pages 1-29, March.
  • Handle: RePEc:vrs:openec:v:1:y:2017:i:1:p:1-29:n:1
    DOI: 10.1515/openec-2017-0001
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    9. Benkraiem, Ramzi & Uyar, Ali & Kilic, Merve & Schneider, Friedrich, 2021. "Ethical behavior, auditing strength, and tax evasion: A worldwide perspective," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 43(C).
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    12. Sorina Emanuela ȘTEFONI & Andreea DRAGHIA, 2020. "Impact of education and government effectiveness on the shadow economy," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(3(624), A), pages 75-84, Autumn.
    13. Acosta-Henao, Miguel, 2023. "Law enforcement and the size of the informal sector," Economic Modelling, Elsevier, vol. 126(C).
    14. Dennis Nchor, 2021. "Shadow economies and tax evasion: The case of the Czech Republic, Poland and Hungary," Society and Economy, Akadémiai Kiadó, Hungary, vol. 43(1), pages 21-37, March.
    15. Mykolas Navickas & Vytautas JuÅ¡Ä ius & Valentinas Navickas, 2019. "Determinants of Shadow Economy in Eastern European Countries," Scientific Annals of Economics and Business (continues Analele Stiintifice), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 66(1), pages 1-14, March.
    16. Hajilee, Massomeh & Niroomand, Farhang, 2021. "Is there an asymmetric link between the shadow economy and the financial depth of emerging market economies?," The Journal of Economic Asymmetries, Elsevier, vol. 23(C).

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