Shadow Economies and Corruption All Over the World: What Do We Really Know?

66 Pages Posted: 6 Dec 2010

See all articles by Friedrich Schneider

Friedrich Schneider

Johannes Kepler University Linz - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Institute for the Study of Labor (IZA)

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Date Written: 2007

Abstract

Estimations of the shadow economies for 145 countries, including developing, transition and highly developed OECD economies over 1999 to 2003 are presented. The average size of the shadow economy (as a percent of "official" GDP) in 2002/03 in 96 developing countries is 38.7%, in 28 transition countries 40.1% and in 21 OECD countries 16.3%. An increased burden of taxation and social security contributions, combined with a labour market regulation are the driving forces of the shadow economy. Furthermore, the results show that the shadow economy reduces corruption in high income countries, but increases corruption in low income countries. Finally, the various estimation methods are discussed and critically evaluated.

Keywords: shadow economy of 145 countries, tax burden, tax moral, quality of state institutions, regulation, DYMIMIC and other estimation methods

JEL Classification: O17, O5, H2, H11, D78, H26

Suggested Citation

Schneider, Friedrich G., Shadow Economies and Corruption All Over the World: What Do We Really Know? (2007). Economics: The Open-Access, Open-Assessment E-Journal, Vol. 1, Issue 5, pp. 1-29, 2007. Available at SSRN: https://ssrn.com/abstract=1719953 or http://dx.doi.org/10.5018/economics-ejournal.ja.2007-5

Friedrich G. Schneider (Contact Author)

Johannes Kepler University Linz - Department of Economics ( email )

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CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

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Institute for the Study of Labor (IZA)

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