DETERMINANTS OF UNDERGROUND ECONOMY IN EU COUNTRIES

Eugenia Mara () and Diana Sabau-Popa ()

Theoretical and Applied Economics, 2013, vol. XX, issue Special I, 213-220

Abstract: This study tries to test the correlation between taxation and underground economy for the EU countries. In this regard based on panel data techniques (fixed and random effects) we use as fiscal determinants of underground economy the implicit tax rate on consumption, implicit tax rate on labour and the level of public expenditures. These variables reflect the level of tax burden. Also we use the unemployment rate and inflation as economic determinants of underground economy. The results confirm these variables as significant determinants of shadow economy.

Keywords: underground economy; tax burden; labor taxation. (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:agr:journl:v:xx:y:2013:i:special-i:p:213-220

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