Does the shadow economy raise observed aggregate efficiency? A cross-country comparison
AbstractWe analyze how adding the shadow economy to official output figures affects technical efficiency. We find that this only slightly affects the ranking of efficiency scores, but increases average efficiency. Our results are robust to the functional form of the production technology and the adjustment of labor to account for years of schooling.
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Bibliographic InfoPaper provided by Department of Economics, Johannes Kepler University Linz, Austria in its series Economics working papers with number 2006-09.
Date of creation: Jul 2006
Date of revision:
shadow economy; income; aggregate productivity; efficiency;
Other versions of this item:
- Pierre-Guillaume Méon & Axel Dreher & Friedrich Schneider & Laurent Weill, . "Does the shadow economy raise observed aggregate efficiency? A cross-country comparison," ULB Institutional Repository 2013/8406, ULB -- Universite Libre de Bruxelles.
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
- O5 - Economic Development, Technological Change, and Growth - - Economywide Country Studies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-12-09 (All new papers)
- NEP-DEV-2006-12-09 (Development)
- NEP-EFF-2006-12-09 (Efficiency & Productivity)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- 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.
- Friedrich Schneider, 2004. "Shadow Economies around the World: What do we really know?," IAW Discussion Papers 16, Institut für Angewandte Wirtschaftsforschung (IAW).
- Francesco Caselli, 2004.
"Accounting for Cross-Country Income Differences,"
NBER Working Papers
10828, National Bureau of Economic Research, Inc.
- Kneller, Richard & Andrew Stevens, Philip, 2003. "The specification of the aggregate production function in the presence of inefficiency," Economics Letters, Elsevier, vol. 81(2), pages 223-226, November.
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