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Underground economy modelling: simple models with complicated dynamics

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  • Albu, Lucian-Liviu

Abstract

The paper aims to model the underground economy using two different models: one based on the labor supply method and a generalized model for the allocation of time. The model based on the labor supply method is conceived as a simulating one in order to determine some reasonable thresholds of the underground sector extension based only on the available macroeconomic statistical data. The generalized model for the allocation of time is a model based on direct approach which estimates the underground economy through extrapolation of the data collected from a limited number of households. Developing the Lemieux model, the map of the entire process of allocation of time was obtained.

Suggested Citation

  • Albu, Lucian-Liviu, 2003. "Underground economy modelling: simple models with complicated dynamics," MPRA Paper 12447, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:12447
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    References listed on IDEAS

    as
    1. Kesselman, Jonathan R., 1989. "Income tax evasion : An intersectoral analysis," Journal of Public Economics, Elsevier, vol. 38(2), pages 137-182, March.
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    5. Dobrescu, Emilian, 1996. "Macromodels of the Romanian transition Economy," MPRA Paper 35810, University Library of Munich, Germany.
    6. Lemieux, Thomas & Fortin, Bernard & Frechette, Pierre, 1994. "The Effect of Taxes on Labor Supply in the Underground Economy," American Economic Review, American Economic Association, vol. 84(1), pages 231-254, March.
    7. Pencavel, John H., 1979. "A note on income tax evasion, labor supply, and nonlinear tax schedules," Journal of Public Economics, Elsevier, vol. 12(1), pages 115-124, August.
    8. Yitzhaki, Shlomo, 1974. "Income tax evasion: A theoretical analysis," Journal of Public Economics, Elsevier, vol. 3(2), pages 201-202, May.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    underground economy; labor supply method; Laffer curve; allocation of time; Lemieux model;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • P36 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • D10 - Microeconomics - - Household Behavior - - - General
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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