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The Spread of the Shadow Economy as a Moral Dilemma?


  • Dzemydaitė Giedrė

    () (Vilnius University, Lithuania, Russia Department of Economic Policy, Faculty of Economics and Business Administration, Vilnius ,Lithuania)

  • Savilionytė Ieva

    (Vilnius University, Saulėtekio Ave. 22, LT-10225, Vilnius, Lithuania)


The shadow economy remains a significant problem in post-Soviet countries and less economically developed economies. Even though there are a lot of economic and social arguments for the emergence of the shadow economy, it remains the question how much of the shadow economy, as well as an intrinsic willingness to pay taxes, could be explained by social norms, business ethics and illegal business practices that come from the cultural and historical background. This paper focuses on the ethical dilemma and tries to figure out how morality reflects in the tendency to participate in shadow economy. A qualitative approach is applied in this paper to find linkages between moral norms and an acceptance of the shadow economy. This paper supports the idea that people’s backgrounds, their moral norms and close relationships affect how they perceive tax evasion and how much they are willing to participate in such illegal activities.

Suggested Citation

  • Dzemydaitė Giedrė & Savilionytė Ieva, 2017. "The Spread of the Shadow Economy as a Moral Dilemma?," Ekonomika (Economics), Sciendo, vol. 96(3), pages 44-55, January.
  • Handle: RePEc:vrs:ekonom:v:96:y:2017:i:3:p:44-55:n:4

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    References listed on IDEAS

    1. Putniņš, Tālis J. & Sauka, Arnis, 2015. "Measuring the shadow economy using company managers," Journal of Comparative Economics, Elsevier, vol. 43(2), pages 471-490.
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    6. Jaanika Meriküll & Karsten Staehr, 2010. "Unreported Employment and Envelope Wages in Mid-Transition: Comparing Developments and Causes in the Baltic Countries," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 52(4), pages 637-670, December.
    7. Tālis J. Putniņš & Arnis Sauka, 2011. "Size and determinants of shadow economies in the Baltic States," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 11(2), pages 5-25, December.
    8. Cummings, Ronald G. & Martinez-Vazquez, Jorge & McKee, Michael & Torgler, Benno, 2009. "Tax morale affects tax compliance: Evidence from surveys and an artefactual field experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 70(3), pages 447-457, June.
    9. James Alm & Benno Torgler, 2011. "Do Ethics Matter? Tax Compliance and Morality," Journal of Business Ethics, Springer, vol. 101(4), pages 635-651, July.
    10. Robert McGee & Simon Ho & Annie Li, 2008. "A Comparative Study on Perceived Ethics of Tax Evasion: Hong Kong Vs the United States," Journal of Business Ethics, Springer, vol. 77(2), pages 147-158, January.
    11. Christian Daude & Hamlet Gutierrez & Ángel Melguizo, 2013. "What Drives Tax Morale? A Focus on Emerging Economies," Hacienda Pública Española / Review of Public Economics, IEF, vol. 207(4), pages 9-40, December.
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