The Shadow Economy and Work in the Shadow: What Do We (Not) Know?

73 Pages Posted: 31 Mar 2012

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)

Abstract

In this paper the main focus lies on the shadow economy and on work in the shadow in OECD, developing and transition countries. Besides informal employment in the rural and non-rural sector also other measures of informal employment like the share of employees not covered by social security, own account workers or unpaid family workers are shown. The most influential factors on the shadow economy and/or shadow labor force are tax policies and state regulation, which, if they rise, increase both. Furthermore the discussion of the recent micro studies underline that economic opportunities, the overall burden of the state (taxes and regulations), the general situation on the labor market, and unemployment are crucial for an understanding of the dynamics of the shadow economy and especially the shadow labor force.

Keywords: shadow economy, undeclared work, shadow labor force, tax morale, tax pressure, state regulation, labor market

JEL Classification: K42, H26, D78

Suggested Citation

Schneider, Friedrich G., The Shadow Economy and Work in the Shadow: What Do We (Not) Know?. IZA Discussion Paper No. 6423, Available at SSRN: https://ssrn.com/abstract=2031951 or http://dx.doi.org/10.2139/ssrn.2031951

Friedrich G. Schneider (Contact Author)

Johannes Kepler University Linz - Department of Economics ( email )

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