An estimation of the informal economy in the agricultural sector in the EU‐15 from 1996 to 2019

This study is the first to calculate the size and development of the informal/shadow economies in the agricultural sector for 15 “old” EU countries over 1996–2019. The multiple indicators multiple causes model was used for the estimation of levels and development of informal economies of these countries. The results show higher levels of informal economies in agriculture compared with those in the overall economies. One main contributing factor to this development was a change in the subsidization regime, namely, decoupling Common Agricultural Policy payments from quantities of products produced, introduced in 2003. The effects of taxation, share of imports, and factor income in agriculture are also important for the size of the informal agricultural economy. Finally, we disaggregate the informal work into subcategories, such as self‐employed, family and nonfamily, and household work. The biggest potential for the development of informal economy comes from taxation, regulation, and self‐employment, followed by family work and unreported employment. [EconLit Citations: Q11, Q14, Q19].