Using various methods (currency demand, physical input (electricity) method, model approach), which are discussed and criticized, estimates of the size of the shadow economy in 76 developing, transition and OECD-countries are presented. The average size of a sha dow economy varies from 12 percent of GDP for OECD, to 23 percent for transition and to 39 percent for developing countries. An increasing burden of taxation and social security contributions combined with rising state regulatory activities are the drivin g forces for the increase of the shadow economy especially in OECD-countries. According to some findings, a growing shadow economy has a negative effect on official GDP growth, and a positive impact of corruption on the size of the shadow economy can be found.
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number
CESifo Working Paper No. 196.
Find related papers by JEL classification: D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy-Making and Implementation H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements O50 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - General
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