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Size and Development of the Shadow Economy and of Do-it-Yourself Activities: The Case of Germany

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Author Info
Andreas Buhn
Alexander Karmann
Friedrich Schneider

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Abstract

This paper presents the first MIMIC (multiple indicator multiple causes) model estimate of the size and development of the shadow economy and of do-it-yourself (DIY) activities in Germany from 1970 to 2005. By 2005, they reached a level of about 17% and 4.94%. While the shadow economy has regularly increased over the years, DIY activities – though quite sizeable – have remained more or less constant since the early 1990s. The driving forces for the shadow economy are regulation and tax burden whereas for DIY activities, the level of unemployment is the main factor.

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Publisher Info
Paper provided by Center for Research in Economics, Management and the Arts (CREMA) in its series CREMA Working Paper Series with number 2007-14.

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Date of creation: Jun 2007
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Handle: RePEc:cra:wpaper:2007-14

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Related research
Keywords: Shadow economy Do-it-yourself activities Tax burden Regulation Domestic currency in circulation Unemployment MIMIC models

Find related papers by JEL classification:
O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
O5 - Economic Development, Technological Change, and Growth - - Economywide Country Studies
D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy-Making and Implementation
H2 - Public Economics - - Taxation, Subsidies, and Revenue
H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion

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