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Does taking the shadow economy into account matter to measure aggregate efficiency?

  • Pierre-Guillaume Méon
  • Friedrich Schneider
  • Laurent Weill

We analyze how adding the shadow economy to official output figures affects estimated technical efficiency at the country level. We find that this only slightly affects the ranking of efficiency scores, but increases average efficiency in a sample of 87 to 97 countries, both developed and developing. Our results are robust to the functional form of the production technology and the adjustment of labour to account for years of schooling.

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Paper provided by ULB -- Universite Libre de Bruxelles in its series Working Papers CEB with number 07-027.RS.

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Length: 16 p.
Date of creation: Oct 2007
Date of revision:
Publication status: Published by: Centre Emile Bernheim, Bruxelles
Handle: RePEc:sol:wpaper:07-027
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  38. Michele Cincera, 2005. "The link between firms' R&D by type of activity and source of funding and the decision to patent," DULBEA Working Papers 05-10.RS, ULB -- Universite Libre de Bruxelles.
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