The shadow economy in industrial countries

Dominik Enste

IZA World of Labor, No 127v3, 127v3

Abstract: The shadow (underground) economy has a major impact on society and economy in many countries. People evade taxes and regulations by working in the shadow economy or by employing people illegally. On the one hand, this unregulated economic activity can result in reduced tax revenue and fewer public goods and services, lower tax morale and less tax compliance, higher control costs, and lower economic growth rates. But on the other hand, the shadow economy can be a powerful force fostering institutional change and boosting the overall production of goods and services in an economy. The shadow economy has implications on the political order and institutional change.

Keywords: shadow economy; underground economy; informal economy; illicit work (search for similar items in EconPapers)
JEL-codes: H26 J22 K42 O17 (search for similar items in EconPapers)
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Journal Article: The shadow economy in industrial countries (2018)
Journal Article: The shadow economy in industrial countries (2015)
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