Does the shadow economy raise observed aggregate efficiency? A cross-country comparison

Pierre-Guillaume Méon, Friedrich Georg Schneider (), Laurent Weill () and Axel Dreher ()

No 2006-09, Economics working papers from Department of Economics, Johannes Kepler University Linz, Austria

Abstract: We analyze how adding the shadow economy to official output figures affects technical efficiency. We find that this only slightly affects the ranking of efficiency scores, but increases average efficiency. Our results are robust to the functional form of the production technology and the adjustment of labor to account for years of schooling.

Keywords: shadow economy; income; aggregate productivity; efficiency (search for similar items in EconPapers)
JEL-codes: O11 O17 O47 O5 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev and nep-eff
Date: 2006-07

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Persistent link: http://EconPapers.repec.org/RePEc:jku:econwp:2006_09

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