The Shadow Economy in Germany - A Blessing or a Curse for the Official Economy?

Friedrich Schneider ()

Economic Analysis and Policy, 2008, vol. 38, issue 1, 89-111

Abstract: This article provides an estimation of the size and development of the shadow economy of Germany, using various estimation procedures. The shadow economy is defined as market-bound production of goods and services which escape detection in the official estimates of GDP. An increased burden of taxation and social security payments, combined with intensive labour market regulation, insufficient quality of state institutions and low tax morale are the driving forces for the shadow economy. Moreover, the results of recent surveys for Germany demonstrate that the readiness to undertake illicit employment as well as its acceptance is high in Germany and other countries. Finally, conclusions are made about the effect of the shadow economy on the official one and incentive-oriented policy means are presented, so that the ‘black’ value added can be transformed into the official value added.

Keywords: shadow economy; inofficial economy; black market (search for similar items in EconPapers)
JEL-codes: D78 H2 H26 O17 O5 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:38:y:2008:i:1:p:89-111

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