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Unemployment and the underground economy in Australia

  • Christopher Bajada

Despite government attempts to reduce welfare benefit fraud in Australia, participation in the underground economy by those claiming to be unemployed continues. Although there exists considerable international literature on the size of the underground economy, academics and public officials alike have paid little attention to the extent of participation in the underground economy by those who claim to be unemployed and in receipt of social security payments. This study provides the first known estimate of how changes in the unemployment rate affect the size and growth of the underground economy in Australia and the likely economic implications this may have for public policy decisions. We find that a number of unemployed Australians prefer to remain unemployed and work surreptitiously in the underground economy, while others, after becoming unemployed and finding legitimate employment, prefer to continue working in the underground economy.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/0003684042000291335
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Article provided by Taylor & Francis Journals in its journal Applied Economics.

Volume (Year): 37 (2005)
Issue (Month): 2 ()
Pages: 177-189

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Handle: RePEc:taf:applec:v:37:y:2005:i:2:p:177-189
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  1. Wesley Clair Mitchell, 1927. "Introductory pages to "Business Cycles: The Problem and Its Setting"," NBER Chapters, in: Business Cycles: The Problem and Its Setting, pages -23 National Bureau of Economic Research, Inc.
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  8. Harding, Don, 1997. "The Definition, Dating and Duration of Cycles," MPRA Paper 3357, University Library of Munich, Germany.
  9. Param Silvapulle & Mervyn J Silvapulle, 1997. "Business Cycle Asymmetry and the Stock Market," Working Papers 1997.22, School of Economics, La Trobe University.
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  11. Wesley Clair Mitchell, 1927. "Business Cycles: The Problem and Its Setting," NBER Books, National Bureau of Economic Research, Inc, number mitc27-1, December.
  12. Bajada, Christopher, 1999. "Estimates of the Underground Economy in Australia," The Economic Record, The Economic Society of Australia, vol. 75(231), pages 369-84, December.
  13. Wesley Clair Mitchell & Arthur F. Burns, 1938. "Statistical Indicators of Cyclical Revivals," NBER Books, National Bureau of Economic Research, Inc, number mitc38-1, December.
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