The Shadow Economy in Bosnia and Herzegovina, Croatia, and Slovenia: The Labor Approach

Bojan Nastav and Štefan Bojnec ()

Eastern European Economics, 2007, vol. 45, issue 1, 29-58

Abstract: This paper deals with the labor aspect of the shadow economy in three countries, Bosnia and Herzegovina (BiH), Croatia, and Slovenia. Despite their common pasts, the countries differ in their levels of shadow-economy activity due to different development levels and paths, but there might be some converging patterns in the long run. The labor methods applied provide evidence on the shadow economy in the economies studied. The study shows that BiH suffers the most from the phenomenon of the shadow economy (averaging over 30 percent of the official GDP in the period 1999-2001), which is somewhat anticipated due to its lower level of economic development, higher rates of unemployment, and devastating consequences of war. For Croatia and Slovenia (averaging around 27 and 20 percent in the post-2000 period, respectively), on the other hand, shadow-economy activities have been, on average, on a downturn since 1994. This is in line with expectations, as economic growth and socioeconomic development are believed to hinder shadow-economy activities.

Date: 2007
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