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Size and Development of the Shadow Economy and of Do-it-Yourself Activities: The Case of Germany

Author

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  • Andreas Buhn
  • Alexander Karmann
  • Friedrich Schneider

Abstract

This paper presents the first MIMIC (multiple indicator multiple causes) model estimate of the size and development of the shadow economy and of do-it-yourself (DIY) activities in Germany from 1970 to 2005. By 2005, they reached a level of about 17% and 4.94%. While the shadow economy has regularly increased over the years, DIY activities ? though quite sizeable ? have remained more or less constant since the early 1990s. The driving forces for the shadow economy are regulation and tax burden whereas for DIY activities, the level of unemployment is the main factor.

Suggested Citation

  • Andreas Buhn & Alexander Karmann & Friedrich Schneider, 2007. "Size and Development of the Shadow Economy and of Do-it-Yourself Activities: The Case of Germany," CREMA Working Paper Series 2007-14, Center for Research in Economics, Management and the Arts (CREMA).
    • Handle: RePEc:cra:wpaper:2007-14
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    References listed on IDEAS

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    More about this item

    Keywords

    Shadow economy; Do-it-yourself activities; Tax burden; Regulation; Domestic currency in circulation; Unemployment; MIMIC models;
    All these keywords.

    JEL classification:

    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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