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Shadow Economies Around the World - Size, Causes, and Consequences

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  • Friedrich Schneider
  • Dominik Enste

Abstract

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 shadow 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 196.

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Date of creation: 1999
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Handle: RePEc:ces:ceswps:_196

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Cited by:
  1. Wolfgang Maennig, 2004. "Korruption im internationalen Sport: ökonomische Analyse und Lösungsansätze," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, DIW Berlin, German Institute for Economic Research, vol. 73(2), pages 263-291.
  2. Chiumya, Chiza, 2007. "The Parallel Economy in Malawi: Size, Effect on Tax Revenue and Policy Options," MPRA Paper 9860, University Library of Munich, Germany.
  3. Trevor Breusch, 2005. "Estimating the Underground Economy using MIMIC Models," Econometrics, EconWPA 0507003, EconWPA, revised 25 Jul 2005.
  4. Chiumya, Chiza, 2006. "Counteracting Tax Evasion In Malawi: An Analysis Of The Methods And A Quest For Improvement," MPRA Paper 9892, University Library of Munich, Germany.
  5. Friedrich Schneider, 2000. "The Increase of the size of the shadow economy of 18 OECD countries: Some preliminary explanations," Economics working papers, Department of Economics, Johannes Kepler University Linz, Austria 2000-08, Department of Economics, Johannes Kepler University Linz, Austria.
  6. Saracoglu, Durdane Sirin, 2003. "On The Size And The Evolution Of The Informal Sector In Developing Countries: The Case Of Turkey," 2003 Annual meeting, July 27-30, Montreal, Canada, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) 22211, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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