Unveiling the shadows: tracing the informal economy in the Balkans from 1996 to 2021

Alban Asllani, Nikolaos Tzivanakis and Friedrich Schneider

Post-Communist Economies, 2025, vol. 37, issue 8, 1093-1124

Abstract: Using the MIMIC model, we analyse the informal economy (IE) in Balkan countries from 1996 to 2021. Results show a decline in the IE, which started at approximately 35% in 1996 but remained relatively high at over 29% of GDP by 2021. This was driven by regulatory burden, financial freedom, urbanisation, macroeconomic factors, and government size. The COVID-19 pandemic caused a rise in informal activity in 2020, increasing by 1–3% points compared to 2019. This study highlights the role of policy-driven and macroeconomic factors in shaping the IE, addressing gaps in understanding post-reform socio-economic developments in the region.

Date: 2025
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DOI: 10.1080/14631377.2025.2566418

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