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What Is the Extent of the Shadow Economy in Serbia?

In: Formalizing the Shadow Economy in Serbia

Author

Listed:
  • Friedrich Schneider

    (University of Linz)

  • Gorana Krstić

    (University of Belgrade)

  • Milojko Arsić

    (University of Belgrade)

  • Saša Ranđelović

    (University of Belgrade)

Abstract

There is an extensive literature on the shadow economy and the methods used to estimate it, but a limited amount that applies to Serbia. This chapter presents recent estimates of the shadow economy in Serbia using three methods. The first is the MIMIC method, a modelling-based approach covering Serbia and ten other Central and Eastern European countries between 2001 and 2010. The second is the Household Tax Compliance (HTC) approach based on macroeconomic data for Serbia for 2010. The third method is based on the data obtained from the representative survey of registered businesses and entrepreneurs in Serbia. This survey was the basis for estimating the extent of the shadow economy in the sector of businesses and entrepreneurs for the two main types of informal activity, illicit trade in goods and undeclared work. The methods used differ in their coverage of the shadow economy in terms of institutional sector, form of shadow economy, and methodology. The MIMIC method has the broadest coverage since it covers all institutional sectors and all forms of the shadow economy. The HTC method estimates only those forms of the shadow economy that can be identified on the basis of household income and consumption data, while estimates based on the survey focus on the most important forms of the shadow economy among business entities. In addition to the shadow economy, this chapter also estimates the tax evasion gap for the most important types of tax in Serbia: value added tax (VAT), social security contributions, and personal income tax.

Suggested Citation

  • Friedrich Schneider & Gorana Krstić & Milojko Arsić & Saša Ranđelović, 2015. "What Is the Extent of the Shadow Economy in Serbia?," Contributions to Economics, in: Gorana Krstić & Friedrich Schneider (ed.), Formalizing the Shadow Economy in Serbia, edition 127, chapter 0, pages 47-75, Springer.
    • Handle: RePEc:spr:conchp:978-3-319-13437-6_5
    DOI: 10.1007/978-3-319-13437-6_5
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    References listed on IDEAS

    as
    1. Friedrich Schneider & Robert Klinglmair, 2004. "Shadow economies around the world: what do we know?," Economics working papers 2004-03, Department of Economics, Johannes Kepler University Linz, Austria.
    2. David E. A. Giles, 1999. "Modelling the hidden economy and the tax-gap in New Zealand," Empirical Economics, Springer, vol. 24(4), pages 621-640.
    3. Simon Johnson & Daniel Kaufman & Andrei Shleifer, 1997. "The Unofficial Economy in Transition," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(2), pages 159-240.
    4. Schneider, Friedrich, 2005. "Shadow economies around the world: what do we really know?," European Journal of Political Economy, Elsevier, vol. 21(3), pages 598-642, September.
    5. David Giles, 1997. "Causality between the measured and underground economies in New Zealand," Applied Economics Letters, Taylor & Francis Journals, vol. 4(1), pages 63-67.
    6. Schneider Friedrich, 2010. "The Influence of Public Institutions on the Shadow Economy: An Empirical Investigation for OECD Countries," Review of Law & Economics, De Gruyter, vol. 6(3), pages 441-468, December.
    7. Lars P. Feld & Friedrich Schneider, 2010. "Survey on the Shadow Economy and Undeclared Earnings in OECD Countries," German Economic Review, Verein für Socialpolitik, vol. 11(2), pages 109-149, May.
    8. Giles, David E A, 1999. "Measuring the Hidden Economy: Implications for Econometric Modelling," Economic Journal, Royal Economic Society, vol. 109(456), pages 370-380, June.
    9. Helberger, Christof & Knepel, Helmut, 1988. "How big is the shadow economy? : A re-analysis of the unobserved-variable approach of B.S. Frey and H. Weck-Hannemann," European Economic Review, Elsevier, vol. 32(4), pages 965-976, April.
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    14. Schneider, Friedrich G., 2007. "Shadow Economies and Corruption All Over the World: New Estimates for 145 Countries," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 1, pages 1-66.
    15. Frey, Bruno S. & Weck-Hanneman, Hannelore, 1984. "The hidden economy as an 'unobserved' variable," European Economic Review, Elsevier, vol. 26(1-2), pages 33-53.
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    17. Kaufmann, Daniel & Kaliberda, Aleksander, 1996. "Integrating the unofficial economy into the dynamics of post-socialist economies : a framework of analysis and evidence," Policy Research Working Paper Series 1691, The World Bank.
    18. Johnson, Simon & Kaufmann, Daniel & Zoido-Lobaton, Pablo, 1998. "Regulatory Discretion and the Unofficial Economy," American Economic Review, American Economic Association, vol. 88(2), pages 387-392, May.
    19. Lars P. Feld & Friedrich Schneider, 2010. "Survey on the Shadow Economy and Undeclared Earnings in OECD Countries," German Economic Review, Verein für Socialpolitik, vol. 11(2), pages 109-149, May.
    20. Mária Lackó, 2000. "Hidden Economy – an Unknown Quantity? Comparative Analysis of Hidden Economies in Transition Countries, 1989–95," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 8(1), pages 117-149, March.
    21. Friedrich Schneider & Andreas Buehn & Claudio Montenegro, 2010. "New Estimates for the Shadow Economies all over the World," International Economic Journal, Taylor & Francis Journals, vol. 24(4), pages 443-461.
    22. Susan Pozo (ed.), 1996. "Exploring the Underground Economy," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number eue, November.
    23. Dell'Anno, Roberto, "undated". "Estimating the Shadow Economy in Italy: a Structural Equation Approach," Economics Working Papers 2003-7, Department of Economics and Business Economics, Aarhus University.
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    25. Edward Christie & Mario Holzner, 2004. "Household Tax Compliance and the Shadow Economy in Central and Southeastern Europe," wiiw Balkan Observatory Working Papers 38, The Vienna Institute for International Economic Studies, wiiw.
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