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The Shadow Economy and Work in the Shadow: What Do We (Not) Know?

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  • Schneider, Friedrich

    ()
    (University of Linz)

Abstract

In this paper the main focus lies on the shadow economy and on work in the shadow 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 micro studies underline that economic opportunities, the overall burden of the state (taxes and regulations), the general 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.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6423.

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Length: 73 pages
Date of creation: Mar 2012
Date of revision:
Handle: RePEc:iza:izadps:dp6423

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Related research

Keywords: shadow economy; undeclared work; shadow labor force; tax morale; tax pressure; state regulation; labor market;

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References

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  1. Torgler, Benno & Schneider, Friedrich, 2009. "The impact of tax morale and institutional quality on the shadow economy," Journal of Economic Psychology, Elsevier, Elsevier, vol. 30(2), pages 228-245, April.
  2. Christopher Bajada & Friedrich Schneider, 2009. "Unemployment and the Shadow Economy in the oecd," Revue économique, Presses de Sciences-Po, Presses de Sciences-Po, vol. 60(5), pages 1033-1067.
  3. Egle Tafenau & Helmut Herwartz & Friedrich Schneider, 2010. "Regional Estimates of the Shadow Economy in Europe," International Economic Journal, Taylor & Francis Journals, Taylor & Francis Journals, vol. 24(4), pages 629-636.
  4. Tilman Brück & John P. Haisken-DeNew & Klaus F. Zimmermann, 2003. "Creating Low Skilled Jobs by Subsidising Market-Contracted Household Work," Discussion Papers of DIW Berlin 387, DIW Berlin, German Institute for Economic Research.
  5. Friedrich Schneider & Andreas Buehn & Claudio Montenegro, 2010. "New Estimates for the Shadow Economies all over the World," International Economic Journal, Taylor & Francis Journals, Taylor & Francis Journals, vol. 24(4), pages 443-461.
  6. Dreher, Axel & Kotsogiannis, Christos & McCorriston, Steve, 2007. "Corruption around the world: Evidence from a structural model," Journal of Comparative Economics, Elsevier, vol. 35(3), pages 443-466, September.
  7. Schneider, Friedrich, 1986. " Estimating the Size of the Danish Shadow Economy Using the Currency Demand Approach: An Attempt," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 88(4), pages 643-68.
  8. Axel Dreher & Friedrich Schneider, 2006. "Corruption and the Shadow Economy: An Empirical Analysis," KOF Working papers, KOF Swiss Economic Institute, ETH Zurich 06-123, KOF Swiss Economic Institute, ETH Zurich.
  9. Hazans, Mihails, 2011. "Informal workers across Europe : evidence from 30 European countries," Policy Research Working Paper Series 5912, The World Bank.
  10. Kirchler, Erich & Maciejovsky, Boris & Schneider, Friedrich, 2003. "Everyday representations of tax avoidance, tax evasion, and tax flight: Do legal differences matter?," Journal of Economic Psychology, Elsevier, Elsevier, vol. 24(4), pages 535-553, August.
  11. Torgler, Benno, 2002. " Speaking to Theorists and Searching for Facts: Tax Morale and Tax Compliance in Experiments," Journal of Economic Surveys, Wiley Blackwell, Wiley Blackwell, vol. 16(5), pages 657-83, December.
  12. Axel Dreher & Christos Kotsogiannis & Steve McCorriston, 2005. "How Do Institutions Affect Corruption and the Shadow Economy," Discussion Papers, Exeter University, Department of Economics 0505, Exeter University, Department of Economics.
  13. Andreas Buehn & Alexander Karmann & Friedrich Schneider, 2009. "Shadow Economy and Do-it-Yourself Activities: The German Case," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, Mohr Siebeck, Tübingen, vol. 165(4), pages 701-722, December.
  14. van Eck, Robert & Kazemier, Brugt, 1988. "Features of the Hidden Economy in the Netherlands," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 34(3), pages 251-73, September.
  15. Friedman, Eric & Johnson, Simon & Kaufmann, Daniel & Zoido-Lobaton, Pablo, 2000. "Dodging the grabbing hand: the determinants of unofficial activity in 69 countries," Journal of Public Economics, Elsevier, Elsevier, vol. 76(3), pages 459-493, June.
  16. Enrico Marcelli, 2004. "Unauthorized Mexican Immigration, Day Labour and other Lower-wage Informal Employment in California," Regional Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 38(1), pages 1-13.
  17. Frey, Bruno S & Pommerehne, Werner W, 1984. "The Hidden Economy: State and Prospects for Measurement," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 30(1), pages 1-23, March.
  18. Andreas Buehn & Friedrich Schneider, 2012. "Corruption and the shadow economy: like oil and vinegar, like water and fire?," International Tax and Public Finance, Springer, Springer, vol. 19(1), pages 172-194, February.
  19. Allingham, Michael G. & Sandmo, Agnar, 1972. "Income tax evasion: a theoretical analysis," Journal of Public Economics, Elsevier, Elsevier, vol. 1(3-4), pages 323-338, November.
  20. Annette Mummert & Friedrich Schneider, 2001. "The German Shadow Economy: Parted in a United Germany?," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, Mohr Siebeck, Tübingen, vol. 58(3), pages 286-, July.
  21. Schneider, Friedrich, 2005. "Shadow economies around the world: what do we really know?," European Journal of Political Economy, Elsevier, vol. 21(3), pages 598-642, September.
  22. Feige, Edgar L, 1994. "The Underground Economy and the Currency Enigma," Public Finance = Finances publiques, , , vol. 49(Supplemen), pages 119-36.
  23. Tanzi, Vito, 1999. "Uses and Abuses of Estimates of the Underground Economy," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 109(456), pages F338-47, June.
  24. David E. A. Giles, 1999. "Modelling the hidden economy and the tax-gap in New Zealand," Empirical Economics, Springer, Springer, vol. 24(4), pages 621-640.
  25. Kirchler,Erich, 2007. "The Economic Psychology of Tax Behaviour," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521876742.
  26. Friedrich Schneider, 2009. "Size and Development of the Shadow Economy in Germany, Austria and Other oecd-Countries. Some Preliminary Findings," Revue économique, Presses de Sciences-Po, Presses de Sciences-Po, vol. 60(5), pages 1079-1116.
  27. Kastlunger, Barbara & Kirchler, Erich & Mittone, Luigi & Pitters, Julia, 2009. "Sequences of audits, tax compliance, and taxpaying strategies," Journal of Economic Psychology, Elsevier, Elsevier, vol. 30(3), pages 405-418, June.
  28. David KUCERA & Leanne RONCOLATO, 2008. "Informal employment: Two contested policy issues," International Labour Review, International Labour Organization, International Labour Organization, vol. 147(4), pages 321-348, December.
  29. David Giles, 1999. "The rise and fall of the New Zealand underground economy: are the responses symmetric?," Applied Economics Letters, Taylor & Francis Journals, Taylor & Francis Journals, vol. 6(3), pages 185-189.
  30. Désirée Teobaldelli, 2011. "Federalism and the shadow economy," Public Choice, Springer, Springer, vol. 146(3), pages 269-289, March.
  31. Schneider Friedrich, 2010. "The Influence of Public Institutions on the Shadow Economy: An Empirical Investigation for OECD Countries," Review of Law & Economics, De Gruyter, De Gruyter, vol. 6(3), pages 441-468, December.
  32. Simon Johnson & Daniel Kaufman & Andrei Shleifer, 1997. "The Unofficial Economy in Transition," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(2), pages 159-240.
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Citations

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Cited by:
  1. Travis Wiseman, 2013. "US shadow economies: a state-level study," Constitutional Political Economy, Springer, Springer, vol. 24(4), pages 310-335, December.
  2. Eichhorst, Werner & Tobsch, Verena, 2013. "Has atypical work become typical in Germany? : country case studies on labour market segmentation," ILO Working Papers, International Labour Organization 481496, International Labour Organization.
  3. Eichhorst, Werner & Tobsch, Verena, 2013. "Has Atypical Work Become Typical in Germany?," IZA Discussion Papers 7609, Institute for the Study of Labor (IZA).
  4. Manos Matsaganis & Chrysa Leventi & Maria Flevotomou, 2012. "The Crisis and Tax Evasion in Greece: What are the Distributional Implications?," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, Ifo Institute for Economic Research at the University of Munich, vol. 13(2), pages 26-32, 07.

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