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Title:Increasing Shadow Economies all over the World - Fiction or Reality? PDF Logo
Authors:Ernste, Dominik
Schneider, Friedrich G.
Issue Date:1998
Series/Report no.:IZA Discussion paper series 26
Abstract:Using various methods (currency demand, physical input (electricity) measure, model approach), which are discussed and criticized, estimates about the size of 67 developing, transition and OECD countries are presented. The average size of the shadow economy (in % of GDP) over 1989-93 in developing countries is 39.2%, in transition countries 23.2% and in OECD countries 14.2%. An increasing burden of taxation and social security contributions combined with rising state regulatory activities are the driving forces for the size of the shadow economy. According to some findings, a growing shadow economy has a negative impact on official GDP growth, however, a positive impact of corruption on the size of the shadow economy can be found, i.e. the bigger the corruption, the larger is the shadow economy.
Subjects:shadow economy
corruption
tax evasion
JEL:H2
H26
O5
O17
D78
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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