Estimating the Shadow Economy in Italy: a Structural Equation Approach
AbstractThe aims of this paper are, firstly, to estimate the Italian shadow economy by means of a structural equation approach and, secondly, to verify the generality of the main criticisms about the reliability of the "MIMIC method" (or model approach) for this kind of analysis. Using the Italian shadow economy, I will show how only some of these are confirmed, others exist as a consequence of the model implementation and sample and some more will exposed to question this methodology. Particular attention is paid to detect the assumptions that should be respected to use appropriately this technique (test of multinormality, independence between measurement and structural errors, unit root detection, etc.). According to the obtained results, is confirmed a sufficient reliability of this approach for the estimate of the size of underground economy.
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Bibliographic InfoPaper provided by School of Economics and Management, University of Aarhus in its series Economics Working Papers with number 2003-7.
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Shadow Economy; Structural Equation Model; Tax Evasion;
Find related papers by JEL classification:
- O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
- C39 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Other
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
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