IDEAS home Printed from https://ideas.repec.org/a/taf/intecj/v24y2010i4p511-523.html
   My bibliography  Save this article

Determinants and Size of the Shadow Economy - A Structural Equation Model

Author

Listed:
  • Marcus Ruge

Abstract

The main objective of this paper is to analyze the determinants of the shadow economy within a coherent Structural Equation Model using a data set of 11 latent variables with 58 indicators from 35 countries. The shadow economy is closely connected to its determinants; a higher wealth and development level, a better administrative system, lower taxes and social security payments and the extent of labor market regulations determine the level of shadow economy. Germany ranks 16th of 35 countries by shadow economy, with a score of 3.6, with the best being New Zealand, 1.0, and the worst Romania, 10.

Suggested Citation

  • Marcus Ruge, 2010. "Determinants and Size of the Shadow Economy - A Structural Equation Model," International Economic Journal, Taylor & Francis Journals, vol. 24(4), pages 511-523.
    • Handle: RePEc:taf:intecj:v:24:y:2010:i:4:p:511-523
    DOI: 10.1080/10168737.2010.525988
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2010.525988
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/10168737.2010.525988?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Friedrich Schneider & Christopher Bajada, 2003. "The Size and Development of the Shadow Economies in the Asia-Pacific," Economics working papers 2003-01, Department of Economics, Johannes Kepler University Linz, Austria.
    2. Walter A. S. Koch, 2007. "Zum Umfang der Schwarzarbeit in Deutschland," List Forum Chapter, in: List Gesellschaft e.V. (ed.), List Forum Band 33, edition 1, volume 2, chapter 9, pages 153-172, List Gesellschaft e.V..
    3. José Brambila Macias & Guido Cazzavillan, 2010. "Modeling the informal economy in Mexico:a structural equation approach," Journal of Developing Areas, Tennessee State University, College of Business, vol. 44(1), pages 345-365, September.
    4. Ulrich Thiessen, 2010. "The Shadow Economy in International Comparison: Options for Economic Policy Derived from an OECD Panel Analysis," International Economic Journal, Taylor & Francis Journals, vol. 24(4), pages 481-509.
    5. Schneider, Friedrich, 2004. "The Size of the Shadow Economies of 145 Countries all over the World: First Results over the Period 1999 to 2003," IZA Discussion Papers 1431, Institute of Labor Economics (IZA).
    6. Gerhard Graf, 2007. "Die volkswirtschaftliche Bedeutung von Schwarzarbeit," List Forum Chapter, in: List Gesellschaft e.V. (ed.), List Forum Band 33, edition 1, volume 2, chapter 6, pages 106-128, List Gesellschaft e.V..
    7. Trevor Breusch, 2005. "Estimating the Underground Economy using MIMIC Models," Econometrics 0507003, University Library of Munich, Germany, revised 15 Dec 2005.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hans-Georg Petersen & Ulrich Thiessen, 2010. "Editors' Introduction: Shadow Economy in High Income Countries - Much Ado about Nothing?," International Economic Journal, Taylor & Francis Journals, vol. 24(4), pages 413-419.
    2. Djula Borozan & Josip Arneric & Ilija Coric, 2017. "A comparative study of net entrepreneurial productivity in developed and post-transition economies," International Entrepreneurship and Management Journal, Springer, vol. 13(3), pages 855-880, September.
    3. Tomas Lichard & Jan Hanousek & Randall K. Filer, 2012. "Measuring the Shadow Economy: Endogenous Switching Regression with Unobserved Separation," Economics Working Paper Archive at Hunter College 438, Hunter College Department of Economics.
    4. Psychoyios, Dimitrios & Missiou, Olympia & Dergiades, Theologos, 2021. "Energy based estimation of the shadow economy: The role of governance quality," The Quarterly Review of Economics and Finance, Elsevier, vol. 80(C), pages 797-808.
    5. Berg, Lyudmila N., 2020. "Systematization of the EAEU legal sources in the field of regulation of the service market in science," Economic Consultant, Roman I. Ostapenko, vol. 32(4), pages 83-93.
    6. Ligita Gasparėnienė & Rita Remeikienė & Colin C. Williams, 2022. "Unemployment and the Informal Economy," SpringerBriefs in Economics, Springer, number 978-3-030-96687-4, June.
    7. Claudio Quintano & Paolo Mazzocchi, 2018. "Behind the GDP: some remarks on the shadow economy in Mediterranean countries," European Journal of Law and Economics, Springer, vol. 45(1), pages 147-173, February.
    8. Schneider, Friedrich, 2017. "Restricting or Abolishing Cash: An Effective Instrument for Fighting the Shadow Economy, Crime and Terrorism?," International Cash Conference 2017 – War on Cash: Is there a Future for Cash? 162914, Deutsche Bundesbank.
    9. Piotr Dybka & Michał Kowalczuk & Bartosz Olesiński & Andrzej Torój & Marek Rozkrut, 2019. "Currency demand and MIMIC models: towards a structured hybrid method of measuring the shadow economy," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(1), pages 4-40, February.
    10. Friedrich Schneider, 2017. "Implausible Large Differences in the Sizes of Underground Economies in Highly Developed European Countries? A Comparison of Different Estimation Methods," CESifo Working Paper Series 6522, CESifo.
    11. Medda, Tiziana & Palmisano, Flaviana & Sacchi, Agnese, 2022. "Informal we stand? The role of social progress around the world," International Review of Economics & Finance, Elsevier, vol. 78(C), pages 660-675.
    12. Quintano, Claudio & Mazzocchi, Paolo, 2013. "The shadow economy beyond European public governance," Economic Systems, Elsevier, vol. 37(4), pages 650-670.
    13. Aristidis Bitzenis & Vasileios Vlachos & Friedrich Schneider, 2016. "An Exploration of the Greek Shadow Economy: Can Its Transfer into the Official Economy Provide Economic Relief Amid the Crisis?," Journal of Economic Issues, Taylor & Francis Journals, vol. 50(1), pages 165-196, January.
    14. Hailin Chen & Friedrich Schneider & Qunli Sun, 2018. "Size, Determinants, and Consequences of Corruption in China's Provinces: The MIMIC Approach," CESifo Working Paper Series 7175, CESifo.
    15. Dell'Anno, Roberto & Pergolizzi, Antonio & Pittiglio, Rosanna & Reganati, Filippo, 2020. "Waste crime in Italian Regions: A Structural Equation Approach," Socio-Economic Planning Sciences, Elsevier, vol. 71(C).
    16. Tomáš Lichard & Jan Hanousek & Randall K. Filer, 2021. "Hidden in plain sight: using household data to measure the shadow economy," Empirical Economics, Springer, vol. 60(3), pages 1449-1476, March.
    17. Friedrich Schneider, 2021. "Do Different Estimation Methods Lead to Implausible Differences in the Size of the Non-Observed or Shadow Economies? A Preliminary Answer," CESifo Working Paper Series 9434, CESifo.
    18. Lizina, Olga M., 2020. "State of shadow economic activity in Russian regions," Economic Consultant, Roman I. Ostapenko, vol. 32(4), pages 73-82.
    19. Mykolas Navickas & Vytautas JuÅ¡Ä ius & Valentinas Navickas, 2019. "Determinants of Shadow Economy in Eastern European Countries," Scientific Annals of Economics and Business (continues Analele Stiintifice), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 66(1), pages 1-14, March.
    20. Roberto Dell’Anno, 2020. "Corruption around the world: an analysis by partial least squares—structural equation modeling," Public Choice, Springer, vol. 184(3), pages 327-350, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Luisanna Onnis & Patrizio Tirelli, 2010. "Challenging the popular wisdom. New estimates of the unobserved economy," Working Papers 184, University of Milano-Bicocca, Department of Economics, revised Apr 2010.
    2. Michael Pickhardt & Jordi Sarda, 2011. "The size of the underground economy in Germany: a correction of the record and new evidence from the modified-cash-deposit-ratio approach," European Journal of Law and Economics, Springer, vol. 32(1), pages 143-163, August.
    3. Friedrich Schneider & Friedrich Schneider, 2008. "Shadow Economies and Corruption all over the World: What do we Really Know?," Chapters, in: Michael Pickhardt & Edward Shinnick (ed.), The Shadow Economy, Corruption and Governance, chapter 7, pages 122-187, Edward Elgar Publishing.
    4. Arzhenovskiy, Sergey, 2023. "Estimate of shadow economy dynamics in Russia and regions: The inflationary aspect," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 69, pages 121-140.
    5. Luisanna Onnis & Patrizio Tirelli, 2011. "Institutions, policies and economic development. What are the causes of the shadow economy?," Working Papers 206, University of Milano-Bicocca, Department of Economics, revised Mar 2011.
    6. Suslov, N. & Mel'tenisova, E., 2015. "Analysis of Energy Price's Impact on Shadow Economies Around the World," Journal of the New Economic Association, New Economic Association, vol. 27(3), pages 12-43.
    7. Nora Angour & Mohammed Nmili, 2019. "Estimating Shadow Economy and Tax Evasion: Evidence from Morocco," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 11(5), pages 1-7, May.
    8. Colin C. Williams, 2014. "Confronting the Shadow Economy," Books, Edward Elgar Publishing, number 15370.
    9. Bennihi, Aymen Salah & Bouriche, Lahcene & Schneider, Friedrich, 2021. "The informal economy in Algeria: New insights using the MIMIC approach and the interaction with the formal economy," Economic Analysis and Policy, Elsevier, vol. 72(C), pages 470-491.
    10. Vicente Ríos & Antonio Gómez & Pedro Pascual, 2021. "Raising the Accuracy of Shadow Economy Measurements," Hacienda Pública Española / Review of Public Economics, IEF, vol. 239(4), pages 71-125, November.
    11. Sarsen Zhanabekov, 2022. "Robust determinants of the shadow economy," Bulletin of Economic Research, Wiley Blackwell, vol. 74(4), pages 1017-1052, October.
    12. Schneider, Friedrich G. & Buehn, Andreas, 2009. "Shadow economies and corruption all over the world: revised estimates for 120 countries," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 1, pages 1-53.
    13. Branimir Jovanovic, 2015. "Kalman Filter Estimation of the Unrecorded Economy in Macedonia," Working Papers 2015-02, National Bank of the Republic of North Macedonia.
    14. Elisa Cavatorta, 2010. "Unobserved Common Factors In Military Expenditure Interactions Across Mena Countries," Defence and Peace Economics, Taylor & Francis Journals, vol. 21(4), pages 301-316.
    15. Carolina Arteaga Cabrales, 2011. "Human Capital Externalities and Growth," Revista ESPE - Ensayos sobre Política Económica, Banco de la Republica de Colombia, vol. 29(66), pages 12-47, December.
    16. Gemmell, Norman & Hasseldine, John, 2012. "The Tax Gap: A Methodological Review," Working Paper Series 18717, Victoria University of Wellington, Chair in Public Finance.
    17. Friedrich Schneider & Robert Klinglmair, 2004. "Shadow economies around the world: what do we know?," Economics working papers 2004-03, Department of Economics, Johannes Kepler University Linz, Austria.
    18. Thorsten Beck, 2003. "Small and medium enterprises, growth, and poverty : cross-country evidence," Policy Research Working Paper Series 3178, The World Bank.
    19. Friedrich Schneider, 2012. "The Shadow Economy and Tax Evasion: What Do We (Not) Know?," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 13(02), pages 03-12, July.
    20. Maxim Bouev, 2002. "Official Regulations and the Shadow Economy: A Labour Market Approach," William Davidson Institute Working Papers Series 524, William Davidson Institute at the University of Michigan.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:intecj:v:24:y:2010:i:4:p:511-523. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RIEJ20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.