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Shadow Economy and Do-it-Yourself Activities: The German Case

Author

Listed:
  • Andreas Buehn
  • Alexander Karmann
  • Friedrich Schneider

Abstract

This paper presents a consistent structural equation (SEM) 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 5% of official GDP. While the shadow economy has regularly increased over the years, DIY activities - though quite sizable - 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.

Suggested Citation

  • 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, vol. 165(4), pages 701-722, December.
    • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(200912)165:4_701:seadat_2.0.tx_2-y
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    References listed on IDEAS

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    1. Gerhard Bosch & Steffen Lehndorff, 1998. "Arbeitszeitverkürzung und Beschäftigung: Erfahrungen in Europa und wirtschaftspolitische Empfehlungen," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 67(4), pages 300-325.
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    More about this item

    JEL classification:

    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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