Do Different Estimation Methods Lead to Implausible Differences in the Size of Nonobserved or Shadow Economies? A Preliminary Answer

Friedrich Schneider ()

Annual Review of Resource Economics, 2023, vol. 15, issue 1, 257-277

Abstract: This review evaluates three micro and three macro estimation approaches to determine whether unrealistic differences exist in estimating the size of nonobserved/shadow economies. While some macro-MIMIC estimates are higher than estimates using the statistical discrepancy approach, when adjusting for double-counting, MIMIC approaches provide similar results. Macro approaches usually cover not only typical shadow economy activities, but also voluntary work, do-it-yourself activities, and classical crime activities; by nature, macro approaches will lead to higher and more accurate estimates than micro approaches. However, if certain adjustments are made, the estimated size of the shadow economy using the MIMIC approach comes close to the size of the shadow economy indicated by micro survey approaches. Hence, claims that macro approaches are unrealistically high and rely on unrealistic assumptions must be reconsidered.

Keywords: MIMIC estimation approaches; micro survey approach; survey technique; consumption-income gap approach; shadow economy (search for similar items in EconPapers)
JEL-codes: E01 E26 H26 H32 K42 O17 P24 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Working Paper: Do Different Estimation Methods Lead to Implausible Differences in the Size of the Non-Observed or Shadow Economies? A Preliminary Answer (2021)
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DOI: 10.1146/annurev-resource-090822-114308

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