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Abstract

Various methods to estimate the size of the shadow economy are discussed and the results of the shadow economy of 21 OECD countries are presented. Then the specific case of Italy is investigated and the aim of this section is to produce an estimate of the Italian shadow economy with the MIMIC (Multiple Indicators and Multiple Causes) method. The procedure to obtain the underground economy as a share of official GDP is presented. The paper ends with some general conclusions about the reliability of the model approach and the efficacy of economic policies to reduce the shadow economy.

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... Tax burden is the most important determinant of the hidden economy. Schneider [44] and Schneider and Dell'Anno [45] found that the impact of tax burden on the hidden economy is very significant. Research by Schneider [46] on three Nordic countries (Denmark, Norway and Sweden) revealed similar results, that is, average direct tax rate, average total tax rate (including direct tax and indirect tax) and marginal tax rate all have a significant positive impact on the hidden economy. ...
... Tax burden affects the choice of workers as well. If there is a large gap between the total living cost and after-tax income in the formal economy, workers will have a strong incentive to work in the hidden economy in order to make up the gap by avoiding taxes [44,45]. In this study, the tax burden is expressed as the share of provincial tax revenue in GDP. ...
... This means that the higher the self-employment rate, the larger the hidden economy, and vice versa. Popescu et al. [39] and Schneider and Dell'Anno [45] found that the self-employment ratio is significantly positively correlated with the hidden economy. The hidden income increases the ratio of self-employed and private workers in the total labor. ...
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Previous studies show that the environmental quality is significantly influenced by corruption and the hidden economy separately. However, what is the impact of their interaction effect on environmental quality? Based on Multiple Indicators Multiple Causes (MIMIC) model, this study calculates the scale of hidden economy in Chinese provinces firstly. Then, we apply the method of spatial econometrics to analyze the interaction effect of corruption and the hidden economy on environmental pollution with China’s provincial panel data from 1998 to 2017. The results indicate that the interaction effect between corruption and hidden economy significantly increases pollutant discharge, suggesting that both anti-corruption and control of the hidden economy may improve environmental quality directly and indirectly.
... In this study, we follow Tsakumis et al. (2007), Gabor (2012) and Khlif et al. (2016) by using the macro indirect approach based on the economic estimate of shadow economy developed by Schneider (2004) using dynamic multiple-indicators multiple-causes (DYMIMIC) [4]. This approach consists of a structural equations model with one unobserved variable named the size of the shadow economy. ...
... Notwithstanding the substantial difference, Italy is right after the USA as far as the nominal value of the TG (US$291.6bn) is concerned. It may be a consequence of the fact that organized crime has been developing in this country over many years, and Italy's shadow economy (economia sommersa) plays an important role in overall economic activity (Pinotti, 2015;Livadiotti, 2014;Dell'Anno and Schneider, 2004). On the other hand, if the lowest nominal values of the TG are considered, major differences are visible as well. ...
... MIMIC models are commonly used in economics for modelling the underground economy (for discussion on this topic see e.g. Thomas, 1992;Schneider, 1994;1997;2003;Lippert and Walker, 1997;Johnson et al., 1998aJohnson et al., , 1998bTanzi, 1999;Giles, 1999;Mummert and Schneider, 2001;Dell'Anno and Schneider, 2003;Buehn and Schneider, 2008; Barbosa et al., 2013;Nchor and Adamec, 2015;Breusch, 2016). ...
Preprint
Multiple Indicators Multiple Causes (MIMIC) models are type of structural equation models, a theory-based approach to confirm the influence of a set of exogenous causal variables on the latent variable, and also the effect of the latent variable on observed indicator variables. In a common MIMIC model, multiple indicators reflect the underlying latent variables/factors, and the multiple causes (observed predictors) affect latent variables/factors. Basic assumptions of MIMIC are clearly violated in case of a variable being both an indicator and a cause, i.e. in the presence of reverse causality. Furthermore, the model is then unidentified. To resolve the situation, which can arise frequently, and as MIMIC estimation lacks closed form solutions for parameters we utilize a version of Bollen's (1996) 2SLS estimator for structural equation models combined with J\"oreskog (1970)'s method of the analysis of covariance structures to derive a new, 2SLS estimator for MIMIC models. Our 2SLS empirical estimation is based on static MIMIC specification but we point also to dynamic/error-correction MIMIC specification and 2SLS solution for it. We derive basic asymptotic theory for static 2SLS-MIMIC, present a simulation study and apply findings to an interesting empirical case of estimating precarious status of older workers (using dataset of Survey of Health, Ageing and Retirement in Europe) which solves an important issue of the definition of precarious work as a multidimensional concept, not modelled adequately so far.
... It was followed by a strand of applications by David Giles (Giles 1999a(Giles , b, 2000Giles and Tedds 2002) and, more recently, a massive body of papers by Friedrich Schneider and co-authors (i.a. Dell'Anno and Schneider (2003), Schneider (2005), Bajada and Schneider (2005), Schneider (2006Schneider ( , 2007, Dell'Anno and Schneider (2009), Schneider et al. (2010), Schneider (2016), as well as other researchers (see e.g. Trebicka 2014). ...
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Model-based econometric techniques of the shadow economy estimation have been increasingly popular, but a systematic approach to getting the best of their complementarities has so far been missing. We review the dominant approaches in the literature—currency demand analysis and MIMIC model—and propose a hybrid procedure that addresses their previous critique, in particular the misspecification issues in CDA equations and the vague transformation of the latent variable obtained via MIMIC model into interpretable levels and paths of the shadow economy. We propose a new identification scheme for the MIMIC model, referred to as ‘reverse standarization’. It supplies the MIMIC model with the panel-structured information on the latent variable’s mean and variance obtained from the CDA estimates, treating this information as given in the restricted full information maximum likelihood function. This approach allows avoiding some controversial steps, such as choosing an externally estimated reference point for benchmarking or adopting other ad hoc identifying assumptions. We estimate the shadow economy for up to 43 countries, with the results obtained in the range of 2.8–29.9% of GDP. Various versions of our models remain robust as regards changes in the level of the shadow economy over time and the relative position of the analysed countries. We also find that the contribution of (a correctly specified) MIMIC model to the measurement of trends in the shadow economy is marginal as compared to the contribution of the CDA model, confirming the scepticism of some previous literature towards this method.
... 21 In contrast, the difference between the employment rates for men in Germany and Italy is only 7.3%. Moreover, the difference is 21 Although it is most likely in the Italian case that there are more activities hidden in black/grey markets (Dell'Anno & Schneider, 2003), on its own this would not be able to explain the stark difference between Germany and Italy. Although the aggregated trend for the EU-27 in Figure 3.1 above shows that there have been slight losses in employment in the aftermath of the financial crisis, these losses vary significantly across the individual European countries, particularly between the periphery and core European economies. ...
... Assuming certain elasticity for the electricity/economic activity ratio, one can attribute the difference between the actual electricity consumption and the one explained by the official GDP to the unrecorded economic activity. The MIMIC method has been pioneered by Weck (1983), Frey and Weck (1983a,b), Frey and Weck-Hannemann (1984), and popularized by Friedrich Schneider and co-authors (Schneider and Enste, 2000, Dell'Anno and Schneider, 2003, Bajada and Schneider, 2005 Although most widely used nowadays, the MIMIC method is not without weaknesses. A comprehensive overview of them and of the deficiencies of some of its applications is provided by Breusch (2005). ...
Research
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This paper estimates the unrecorded economic activity and employment in Macedonia during 1998-2013. We model the unrecorded economic activity as an unobserved process that depends on tax "burden", business regulations and quality of governance, and affects cash in circulation, foreign currency in circulation and energy consumption. We then estimate it, using the Kalman filter. After we estimate the unrecorded economic activity in this way, we calculate the unrecorded employment using a wide range of values for the employment/economic activity ratio. Finally, after we estimate the unrecorded employment, we will be able to calculate the true rate of unemployment in Macedonia. The findings suggest that unrecorded economic activity in Macedonia has declined sizeably, from 34 percent of official GDP in the late 1990's, to 10 percent in 2010's. Unrecorded employment has declined over this period, too, from 160-200,000 in late 1990's to 70-90,000 currently. Accordingly, the true rate of unemployment was likely to be around 20-22% in 2013, which is some 7-8 percentage points below the official one.
... The level of hidden economy according to the current and improved version of the "population expenditures -retail turnover" method, % of GDP official volume Source: calculations by the Ministry of Economic Development and Trade[10]. ...
... The broadest and most common definition, which focuses only on legal activities, is: ". . .those economic activities and the income derived from them that circumvent or otherwise avoid government regulation, taxation or observation" (Dell'Anno & Schneider, 2003;Schneider & Enste, 2000). The size of the SE affects, the efficacy of macroeconomic policies, tax revenues, the quantity and quality of public goods and services, international competitiveness, the cost of sovereign debt, the unemployment rate, the banking system, economic growth and productivity. ...
Article
The shadow economy (SE) is a pathological normalcy, not only in developing countries but also in developed ones, causing disagreeable distortions in the real economy. In this paper, we estimate the size of the informal sector in nineteen countries of the European Union (EU) by implementing three variations of the physical input approach (we use electricity consumption as input). All estimates show that EU countries experience high shadow economy levels with a decreasing trend. Moreover, we assess the explanatory power of three governance quality indicators of the informal sector using a set of panel regression specifications as well as a set of quantile regression specifications. Both approaches show that overall governance quality is the most prominent factor in determining the SE levels. Given the inherent advantage of quantile regression to identify impact differentiations across the conditional distribution of the dependent variable a significant policy action is revealed. In particular, countries with high shadow economy levels can reduce their informal sector, at an increasing rate, by improving governance quality.
... However, it has some drawbacks as the possible overestimation of the shadow economy. Other concerns have been exposed by looking at the MIMIC approach and its applications (e.g., Bajada & Schneider, 2005;Breusch, 2016;Dell'Anno & Schneider, 2003;Feige, 2016;Hashimzade & Heady, 2016;Hassen et al., 2016;Schneider, 2016). As stated by Breusch (2005b) one of the most prominent critics of the MIMIC approach, the sensitivity to the change of units of measurement must be considered, since different results can be obtained by measuring the variables in different units. ...
Article
This paper offers estimations for the Portuguese path of the Non‐Observed Economy (NOE), in the period 1970–2015, through two seminal approaches: monetary method and the Multiple Indicators Multiple Causes (MIMIC) model. It is observed that the tax burden and social benefits are its main causes. Then, to get a more in‐depth understanding of the phenomenon, it provides a study of the Granger causality between the NOE and the official Gross Domestic Product (GDP), emphasizing the implications of the NOE on the Portuguese economy. Evidence has been found for the existence of bidirectional causality between the NOE and the GDP, suggesting that the formal economy affects the NOE, and conversely that the NOE affects the economic growth.
... Smith (1985) defines the shadow economy as "market-based production of goods and services, whether legal or illegal, that escapes detection in the official estimates of gross domestic products (GDP)". In other words, the shadow economy includes those economic activities and incomes derived from them that avoid Government regulations, taxation, or observation (Feige, 1989;Dell'Anno & Schneider, 2003). Dell'Anno (2007) regards the shadow economy as a "non-observed economy" which comprises all product activities that can be categorized into three areas: underground production, informal production, and illegal production. ...
Article
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Tax is the main revenue of Government, so fighting tax evasion and sustainable growth have been the primary macroeconomic goals being pursued by every developing country, Vietnam included. The existence and development of the shadow economic sector are synonymous with the national budget losing out. In Vietnam, foreign direct investment projects do not promote economic growth and is also a sector that gives way to tax evasion.The purpose of this study is to investigate the impact of foreign direct investment, the quality of the informal institution on the size of the shadow economy in Vietnam, during the period 1991-2015. By applying the Autoregressive Distributed Lag approach and Toda and Yamamoto test, we found evidence to conclude that the quality of the informal institution harms the size of the shadow economy. The results of the causality test show that there is a unidirectional causality running from the shadow economy and the quality of the informal institution to foreign direct investment attraction in Vietnam. Political solutions need to be implemented carefully to counter the harmful effects of the shadow economy. Policymakers should adopt several economic policies to improve the 'human capital' and drive the shadow economy into the formal economy.
... MIMIC models are commonly used in economics for modelling the underground economy (for discussion on this topic see e.g. Thomas, 1992;Schneider, 1994;1997;2003;Lippert and Walker, 1997;Johnson et al., 1998aJohnson et al., , 1998bTanzi, 1999;Giles, 1999;Mummert and Schneider, 2001;Dell'Anno and Schneider, 2003;Buehn and Schneider, 2008; Barbosa et al., 2013;Nchor and Adamec, 2015;Breusch, 2016). ...
... (1) Tax burdens (a 1 , a 2 , a 3 ). A greater tax burden may cause firms to turn to informal economic activities to avoid taxation (Dell'Anno and Schneider, 2003;Schneider, 2005). Thus, tax burden has a positive effect on the size of the informal economy. ...
Article
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This paper examines the rise of informal economies in China, a hidden driving force overlooked in studies on China’s urbanization. Estimating the size of informal economies using the multiple indicators multiple causes model, the paper employs mathematical models to examine the driving effect of informal economies on urbanization and to reveal the paths by which such effect works. The results were as follows. (1) In 2018, the size of the informal economy in China accounted for 23.5% of GDP with an output value of 21.16 trillion yuan. (2) The informal economy had a driving effect on China’s urbanization, and every 1-percentagepoint increase in its share of the GDP led to an increase of 0.291 percentage points in the urbanization rate. (3) The informal economy’s effect on urbanization showed regional differences, decreasing in size from the eastern to the central to the western regions. (4) The informal economy drives urbanization through four paths - by promoting foreign direct investment (FDI), fixed asset investment (FAI), social consumption (SC), and secondary sector employment (SSE). Their effect sizes are ranked in descending order as follows: FDI > FAI >SC > SSE. This paper contributes to theories on urbanization dynamics and process in China by highlighting the role of the informal economy as a hidden economic power lurking in the city
... Many studies utilize this particular definition to estimate the size of underground economy in various economies (Schneider, 2005;Feige, 1994;Frey and Pommerehne, 1984;Frey and Weck, 1983a). Another widely used definition defines underground economy as those economic activities and income that is obtained from the avenues that evade government regulations, taxation or observations (Dell'Anno, 2003;Feige, 1989). Interestingly, in certain jurisdictions, the illegal activities can be a part of GDP (Eurostat, 2021). ...
Article
Purpose In the presence of informal sector in the country, designing an energy policy and the pursuit of higher economic growth become challenging for emerging economies. These economies are usually resource starved, and the presence of underground economy leads to faulty estimates of energy demand. The authors explore the energy–growth nexus in the presence of underground economy for Pakistan, an emerging economy host to large informal sector and facing recurring energy crises. Design/methodology/approach The authors evaluate the impact of underground economy on energy demand in the presence of explanatory variables, including official gross domestic product (GDP), foreign direct investment and financial development. The authors first assess the influence of official economy on the consumption of energy. The authors investigate how energy consumption is influenced solely by underground economy. Finally, the authors evaluate the impact of true GDP on the energy consumption. The authors employ combined cointegration method of Bayer and Hanck (2013) and then apply vector error correction model. Findings The results reveal that official GDP, underground economy and true GDP positively and significantly affect energy consumption in both short and long run. Similarly, financial development as well as foreign direct investment enhance energy consumption. The authors find unidirectional causality between energy consumption and official GDP variables (OGDP → EC), underground economy (UE → EC) and true GDP variables (TGDP → EC) in the long run. The authors observe bidirectional causality in the short run between energy consumption and official GDP (OGDP ↔ EC) and true GDP (TGDP ↔ EC). Originality/value To the best of the authors' knowledge, no study examines the causal relationship of energy consumption and underground economy. Overall, the findings assist policymakers to consider and implement different energy-related policies considering the significant role of underground economy for energy consumption in Pakistan.
... However, the obtained results are mixed and inconclusive (Baklouti and Boujelbene 2019;Goel, Saunoris, and Schneider 2019). While some support the view that shadow economy has a negative impact on sustainable development (Bologna 2016;Buehn and Farzanegan 2013;Dell'Anno and Schneider 2003;Eilat and Zinnes 2002;Esaku 2021;Hassan and Schneider 2016;Hoinaru et al. 2020;Khuong et al. 2021;La Porta and Shleifer 2014;Loayza 1996;Özgür, Elgin, and Elveren 2021;Schneider, Buehn, and Montenegro 2010), others report evidence of a positive relationship between the shadow and official economy (Dell'Anno 2008;Mawusi 2021;Mughal and Schneider 2020;Nguyen and Duong 2021;Saunoris 2018;Schneider 2008;Schneider and Hametner 2014;Tedds and Giles 2002;Zaman and Goschin 2015). A few other empirical studies also document an insignificant effect of shadow economy on sustainable development (see e.g. ...
Article
Most previous studies that examined the relationship between the size of shadow economy and the pillars of sustainable development maintained that this relationship is linear. This paper provides an empirical contribution to the literature by arguing that this relationship is likely to be nonlinear, and it might be subject to threshold effects. For this purpose, in addition to the static threshold panel model of Hansen (1999. “Threshold Effects in Non-dynamic Panels: Estimation, Testing, and Inference.” Journal of Econometrics 93 (2): 345–68), the dynamic panel threshold model suggested by Seo and Shin (2016. “Dynamic Panels with Threshold Effect and Endogeneity.” Journal of Econometrics 195 (2): 169–86) has been applied to a larger panel-data set covering 83 developed and developing countries over the 1996–2017 period. Empirical results from both models yield evidence advocating the existence of threshold effects of the shadow economy on the economic, social, and environmental dimensions of sustainable development for the global sample as well as the sub-samples of developed and developing countries. Moreover, for the global sample and developing countries, our findings show that shadow economy would spoil the three sustainable development pillars only when its size exceeds a certain threshold critical size. While, the impact for developed countries was found negative even for low levels of underground activities. These finding are shown to be robust to alternative proxies for the size of the shadow economy and have important policy implications, especially for developing countries. In these countries, a moderate size of the shadow economy might have positive spillovers on long-term growth and sustainable development. Our research also suggests that, for developing and developed countries to achieve sustainable goal 8.3, the extent of the shadow activities should be taken into account.
... Medina and Schneider (2018) use the per capita GDP as a cause while keeping the growth rate of GDP as an indicator. Giles andLindsay (2012), Dell'Anno andSchneider (2003) and Bajada and Schneider (2005) use the GDP as a cause and as an indicator jointly. These different specifications have raised strong criticisms against the model. ...
Article
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In combining empirical and theoretical approaches, this thesis examines the development and distributional impacts of the informal economy. The first chapter provides a cross-country study providing new estimates of the evolution of the informal sector and analyzes how informality affects convergence between countries and changes in the world distribution of income. The second chapter characterizes the composition of the formal and informal sectors and analyzes how the earnings structure is affected by informal activities. The third chapter proposes a structural, two-sector model with labor market frictions. The model is calibrated on each province of the DRC and used to analyze the effectiveness of different types of development policies in the presence of a large informal sector. Overall, the thesis shows that accounting for the informal output revises downward the cross-country income differentials and the level of inequality without, however, significantly affecting the mobility of economies within the world distribution of income. In the context of developing countries, the labor market consists of different sectors that are heterogeneous across them when it comes to earnings. Furthermore, when higher-paid and lower-paid sectors are concerned, the labor market provides an "informal employment earning premium" to some workers of the lower-paid sectors who, given their characteristics, would not earn more in the higher-paid sectors. When analyzing development policies, the thesis quantifies a high level of complementarity between them, identify o-ring patterns of spatia...
Article
This paper aims to present a comprehensive survey of the literature on the economics of informality. First, we focus on studies that aim to provide measures of informality using different methodologies. Next, we review empirical and theoretical studies focusing on the determinants as well as effects of informality. Finally, we conclude by summarizing the main findings of the literature, evaluate several policy recommendations based on our review as well as suggest some future research directions. Even though the literature on informality is growing at an increasing rate, future research efforts are very much needed, both on the theoretical and empirical side. Efforts have to be made to improve measurement of informal sector size as well as developing theoretical mechanisms for determinants and effects of informality that can be supported by empirical analysis.
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The United States (US) uses landfills to dispose paper cups at a rate of 40 percent. Landfill rates on plastic disposable dinnerware are even higher at around 80 percent. This study examines consumer preferences for single-use disposable dinnerware with the attributes: uses no trees; contains no plastic; made from agricultural crop byproduct cellulose; cellulose from dedicated crops, and/or organically sourced cellulose; certified biobased; and compostable or recyclable. A Multiple Indicator Multiple Causes (MIMIC) model is used to estimate the effects of demographics, expenditures, and consumer perceptions of disposable dinnerware made with ‘eco-friendly’ materials or processes. The attributes ‘no plastic’ and ‘recyclable’ appealed to consumers over the widest range of preferences for eco-friendly attributes in disposable dinnerware. However, ‘no trees’ and ‘certified biobased’ appeared to appeal to a narrower segment with the strongest preferences for eco-friendly attributes. Demographic characteristics including gender, residential location, household income, household composition, and environmental attitudes also correlated with preferences for single use products made with the attributes examined.
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Tax is one of the ways to finance government expenditures and it plays an important role in increasing the government revenue. The amount of tax collected depends on the structure of the economy. When the taxation system is ineffective, many people will use this opportunity to avoid paying tax and tax evasion will be popular. In the presence of tax evasion, the government cannot allocate revenue for their programs and cannot provide desirable social services. Realizing the significant impact of tax evasion on the economy, this study tries to determine factors that cause tax evasion and their relative contribution. The study employs an Artificial Neural Network methodology on Iran data from 1985-2016. The results show that the tax burdens, the size of governments and inflation rate have positive effect on tax evasion, but there is negative relationship between tax payers' income and trade openness with tax evasion.
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Despite making significant progress in its political democratic transition, Tunisia remains highly vulnerable to economic shocks. The growth rate is too low and unable to reduce high unemployment, and the budget and current account deficits are large, inflation has increased and the population is very unhappy with the economic situation. Indeed the growth rate stood at 2.6% during the third quarter of 2018 against 2% in 2017 and 1% in 2016. The fall of the dinar worsens further, the exchange rate reaches 3.434 D for 1 Euro and 3.042 for 1 Dollar during the month of December 2018. This sharp depreciation of the dinar is due to the decline in exports, as well as to the shock of the revolution which has resulted in the explosion of the parallel sector and the massive importation of consumer products. This situation has also caused a budget deficit of 6.7% of GDP in 2017, to reduce the state acts mainly through tax measures for example by increasing the rate of VAT by 1 point. Public debt and external debt rose to 73% and 80% of GDP, respectively. Currency reserves continued to shrink to less than 80 days of import in March 2018. Inflation in turn accelerated to a record 7.1% in February 2018. The objectives of this article are firstly to estimate the size of the parallel economy in Tunisia over the period 1985-2014, by using MIMIC's approach to model the existing relationships between the various variables. The second objective is to study the existing relationships between the unemployment rate and the size of the parallel economy. The causality test which is used is that of Toda and Yamamoto to determine the sense / direction / meaning of causality between the two variables. The empirical results show that the unemployment rate, the fiscal burden, and the consumption expenditure are the main factors for the development of the parallel economy in Tunisia. Besides, Toda Yamamoto's test of causality indicates a one-way relationship ranging from the unemployment rate to the size of the parallel economy.
Book
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Conference Paper
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The article dedicated to expand the meaning of the shadow economy. The shadow economy is one of the biggest challenges to the any economy, because it has consequences in terms of tax evasion, labor market distortion, unfair competition, and inefficient allocation of resources. In the market economy conditions, the shadow economy became one of the survival part. The shadow economy is closely interwoven with the legal and real sector of the economy and is an integral part of it. In its activities, it also uses the services of the state, its material and social factors, labor power, etc. The article describes the theoretical aspects of the shadow economy, such as the classification forms by activity, the main features, describes the ways of avoiding taxation and give definitions to the forms of shadow activity, describes the groups of shadow economy, shows the examples of undeclared work and its features. The article shows the subjects of illegal activities in the frame of the pyramid conception. Any activity in the frame of the shadow economy is criminal, but not every falls under the norms of the existing legislation. Of course, it also shows advantages and disadvantages of illegal activity, like identifies three positive functions of the shadow economy in the market economy, negative effects on a whole country. The article analysis the current state and dynamics of the shadow economy in developed countries, the main reasons of existing shadow activity in countries, shows statistic data from 2003-2016. Keywords: shadow economy, tax evasion, undeclared work, informal economic activities
Article
There is lack of standard understanding or definition of the shadow economy. The aim of this mainly theoretical paper is twofold. First it brings together the concepts of the available academic research and official statistics. Second it discusses in what sense the calculated shadow economy measures indicate an exceeding amount over the official Gross Domestic Product (GDP). Indicators usually express shadow economy size as a proportion of GDP, so it is of most importance to elucidate the true meaning of these numbers. Official GDP already includes certain part of the shadow activities. Empirical calculations illustrate the weight of overlap.
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