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The nonobserved economy in the European Union

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  • Oscar Afonso
  • Francisco Almeida

Abstract

To better understand the share of the nonobserved economy (NOE) in the European Union, especially on the PIIGS, we estimate, through the multiple indicators multiple causes model, the path between 1980 and 2013. The model includes (i) the tax burden (disaggregated into direct and indirect taxes), a proxy of regulation burden, the unemployment rate and self-employment as causes of the NOE economy; (ii) the GDP and the labour force participation ratio as indicators of the NOE economy. In particular, the estimated weight of NOE as a percentage of official GDP was always higher in the PIIGS group.

Suggested Citation

  • Oscar Afonso & Francisco Almeida, 2017. "The nonobserved economy in the European Union," Applied Economics Letters, Taylor & Francis Journals, vol. 24(1), pages 14-18, January.
    • Handle: RePEc:taf:apeclt:v:24:y:2017:i:1:p:14-18
    DOI: 10.1080/13504851.2016.1158908
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    References listed on IDEAS

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    1. 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.
    2. Schneider Friedrich, 2010. "The Influence of Public Institutions on the Shadow Economy: An Empirical Investigation for OECD Countries," Review of Law & Economics, De Gruyter, vol. 6(3), pages 441-468, December.
    3. Friedrich Schneider & Andreas Buehn & Claudio Montenegro, 2010. "New Estimates for the Shadow Economies all over the World," International Economic Journal, Taylor & Francis Journals, vol. 24(4), pages 443-461.
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