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The Shadow Economy and Shadow Economy Labor Force: What Do We (Not) Know?

Author

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  • Schneider, Friedrich

    (University of Linz)

Abstract

In this paper the main focus lies on the development and the size of the shadow economy and of undeclared work (or shadow economy labor force) in OECD, developing and transition countries. Besides informal employment in the rural and non-rural sector also other measures of informal employment like the share of employees not covered by social security, own account workers or unpaid family workers are shown. The most influential factors on the shadow economy and/or shadow labor force are tax policies and state regulation, which, if they rise, increase both. Furthermore the discussion of the recent literature underlines that economic opportunities, the overall situation on the labor market, and unemployment are crucial for an understanding of the dynamics of the shadow economy and especially the shadow labor force.

Suggested Citation

  • Schneider, Friedrich, 2011. "The Shadow Economy and Shadow Economy Labor Force: What Do We (Not) Know?," IZA Discussion Papers 5769, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp5769
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    References listed on IDEAS

    as
    1. Tilman Bruck & John P. Haisken-De New & Klaus Zimmermann, 2006. "Creating low skilled jobs by subsidizing market-contracted household work," Applied Economics, Taylor & Francis Journals, vol. 38(8), pages 899-911.
    2. Egle Tafenau & Helmut Herwartz & Friedrich Schneider, 2010. "Regional Estimates of the Shadow Economy in Europe," International Economic Journal, Taylor & Francis Journals, vol. 24(4), pages 629-636.
    3. 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.
    4. Stefan D. HAIGNER & Stefan JENEWEIN & Friedrich SCHNEIDER & Florian WAKOLBINGER, 2013. "Driving forces of informal labour supply and demand in Germany," International Labour Review, International Labour Organization, vol. 152(3-4), pages 507-524, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    shadow economy; undeclared work; shadow labor force; tax morale; tax pressure; state regulation;
    All these keywords.

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation

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