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Non-Observed Economy vs. the Shadow Economy in the EU: The Accuracy of Measurements Methods and Estimates revisited

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  • Philippe Adair

    (ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEM - Université Paris-Est Marne-la-Vallée - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12)

Abstract

The Non-Observed Economy (NOE) vs. the shadow economy remains a controversial issue. Illegal, underground and informal activities encapsulated within the NOE/shadow economy display large discrepancies throughout the European Union. First, a tractable taxonomy of the aforementioned market activities is designed according to both definition and scope, whereupon a wide spectrum of estimation methods applies. Second, direct measurements provided by tax audits, household informal expenditure and labour market surveys provide piecemeal information regarding such unobserved activities; a cross-section survey issued from a unique questionnaire applied to all European countries in 2007 and again in 2013 deserves special attention. Third, indirect macroeconomic measurements are drawn from discrepancies on the market for goods and services on the money market and on the labour market, whereas the DYMIMIC (dynamic multiple indicators-multiple causes) method carves the trends of the shadow economy (hereafter SE). Fourth, the estimates of the EU shadow economy drawn from the DYMIMIC model are compared with the assessment of the NOE according to national accounts adjustments; the relevance of major determinants of the NOE/shadow economy-tax burden as well as the characteristics of the informal workforce, is discussed.

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  • Philippe Adair, 2017. "Non-Observed Economy vs. the Shadow Economy in the EU: The Accuracy of Measurements Methods and Estimates revisited," Post-Print hal-01683929, HAL.
    • Handle: RePEc:hal:journl:hal-01683929
    Note: View the original document on HAL open archive server: https://hal.science/hal-01683929
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    References listed on IDEAS

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    Cited by:

    1. Dong Frank Wu & Mr. Friedrich Schneider, 2019. "Nonlinearity Between the Shadow Economy and Level of Development," IMF Working Papers 2019/048, International Monetary Fund.
    2. Umberto Di Maggio & Giuseppe Notarstefano & Giuseppe Terzo, 2022. "In the name of weak legality? Dangerous relations between citizenship income, non-observed economy and tax cheating," RIEDS - Rivista Italiana di Economia, Demografia e Statistica - The Italian Journal of Economic, Demographic and Statistical Studies, SIEDS Societa' Italiana di Economia Demografia e Statistica, vol. 76(1), pages 56-67, January-M.
    3. Philippe Adair, 2021. "The informal economy and gender inequalities in North Africa," Erudite Working Paper 2021-07, Erudite.

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    Keywords

    Estimates; European Union; Measurement Methods; National Accounts; Shadow Economy;
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