Evaluating Competing Theories of the Shadow Economy: Some Lessons from an English Locality
International Journal of Economic Perspectives, Vol. 4, No. 2, pp. 391-402, 2010.
12 Pages Posted: 5 Jul 2013
Date Written: 2010
This paper evaluates critically the contrasting theories of the nature of the shadow economy that variously read this sector as a leftover of pre-capitalism, a by-product of a new emergent form of capitalism, a complement to formal employment or an alternative to the formal economy. Until now, the common tendency has been to either universally privilege one theorisation over the others, or to portray each as appropriate in different places. Reporting data collected through face-to-face interviews with 120 households in an English locality, namely Bassetlaw in North Nottinghamshire, however, the finding is that in this locality each theory is a valid representation of particular types of shadow work, and that only by combining and using them all is it possible to achieve a finer-grained and more comprehensive understanding of the complex and diverse nature of the shadow economy. The paper concludes by outlining how to integrate these contrasting theorisations in a manner that enables the development of a multi-layered and nuanced understanding of the multifarious nature of the shadow economy.
Keywords: informal economy, informal sector, underground economy, shadow economy, livelihoods, economic development
JEL Classification: O17, H26, H31, R20, Z13
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