Informal Economy in Volume and Structure and Measures to Combat It: The Case of the Republic of North Macedonia

Abdylmenaf Bexheti (), Shpresa Alija (), Luljeta Sadiku () and Viktorija Atanasovska Noveski ()
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Abdylmenaf Bexheti: South East European University
Shpresa Alija: South East European University
Luljeta Sadiku: International Balkan University
Viktorija Atanasovska Noveski: University American College Skopje

A chapter in Navigating Economic Uncertainty - Vol. 2, 2025, pp 1-20 from Springer

Abstract: Abstract This scientific analysis provides an estimate of the size of the informal economy in the Republic of North Macedonia, given the fact that the share of the informal economy in the gross domestic product reaches up to 35–40%—this share, which if not reduced, becomes a structural problem for the country’s economic system. This analysis brings a combination of direct and indirect methods, respectively; tax control is used as a direct method to measure the size of the informal economy, while in terms of indirect methods, the unemployment rate, currency demand, and Multiple Indicators Multiple Causes model are used. The high tax burden, low level of public services, low capacities of the Public Revenue Office, companies privileged by politics and state institutions, labor costs, and so on are considered the main reasons for tax evasion of companies that directly affect the informal economy in the Republic of North Macedonia.

Keywords: Informal economy; Tax control; Tax burden; Unemployment rate; Demand for cash; MIMIC model (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-031-73510-3_1

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DOI: 10.1007/978-3-031-73510-3_1

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