THE GENERATING AND COMPLEMENTARY EFFECTS OF THE UNDERGROUND ECONOMY PHENOMENON

Corneliu Sorin Baicu (), Cristian Valentin Hapenciuc () and Iuliana Claudia Mihalache ()
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Corneliu Sorin Baicu: Stefan cel Mare University of Suceava, Romania
Cristian Valentin Hapenciuc: Stefan cel Mare University of Suceava, Romania
Iuliana Claudia Mihalache: Stefan cel Mare University of Suceava, Romania

The USV Annals of Economics and Public Administration, 2016, vol. 16, issue 2(24), 46-54

Abstract: For a comprehensive understanding of the informal sector, an analysis addressing the relationships and links between the morphology and etiology of the underground economy, on the one hand, and its effects on the economic, social or legal, on the other hand is required. The double identity, that of cause phenomenon and effect phenomenon, that the underground economy has, gives it a special status in explaining certain phenomena which vitiates the economic and social life. The generating and complementary effects of the underground area covered in this study are analyzed in terms of the following vectors of analysis: tax evasion, illegal work and money laundering. Tax evasion represents the central core of the underground economy and faithfully expresses the fiscal monetary policies ,the fiscal mortality and the degree of compliance of the taxpayer. Undeclared work is an indicator of the labor market in the informal economy and is a good barometer for analyzing the demand and supply of labor in the visible economy. Money laundering defines the level of economic and financial crime and reflects the level of illegal use of capital on the black market. Tax evasion, money laundering and illegal work can only develop on a framework provided by illicit markets for goods, services and labor. Beyond the, unidirectional or bidirectional relationships between phenomena, the paper consists in a plea for an interdependent, multi-causal analysis of the phenomena and operating mechanisms of the relationships within and outside the underground economy.

Date: 2016
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