A Fundamental Contribution to the Analysis of Shadow Economy

20 Pages Posted: 17 Jul 2014

See all articles by Nicola Genovese

Nicola Genovese

University of Messina - Department of Economics

Maria Grazia La Spada

University of Messina

Date Written: July 16, 2014

Abstract

Schneider has been one of most important authors as regard the analysis of shadow economy. In this article we examine his last two theoretical and econometric contributes. They are sufficient to understand the development of his thinking about the causes and measurement of shadow economy. It is very important his structural equation which is elaborated with the help of microeconomic choices of the operators in the shadow economy. This equation permits to give a clear definition of shadow economy and to elaborate a taxonomic analysis of various activities in shadow economy. To macroeconomic level, Schneider uses the indirect method Multiple-Indicators-Multiple-Causes (MIMIC model), integrated with the measurement of demand for cash regarding the shadow economy. Also the econometric calculus of this phenomenon is very interesting, because two series of statistics are presented. The former regarding the years 1999-2010 and the latter the period 2003-2014. At the end we point and interesting suggestion about the uniformity of the countries considered. It regards the actual situation of some countries as Italy, where the national statistics are not significant because in them there are great differences between their regions. In that case is useful the direct method with interview and questionnaires, that Schneider considered not realizable. With this method and in this condition is possible that the State intervention not is homogenous throughout the country and may present a correct regional articulation, achieving greater effectiveness to contrast shadow economy.

Keywords: shadow economy, microeconomic choices, macroeconomic dates

JEL Classification: D1, O5, H3

Suggested Citation

Genovese, Nicola and La Spada, Maria Grazia, A Fundamental Contribution to the Analysis of Shadow Economy (July 16, 2014). Available at SSRN: https://ssrn.com/abstract=2467167 or http://dx.doi.org/10.2139/ssrn.2467167

Nicola Genovese (Contact Author)

University of Messina - Department of Economics ( email )

Via T. Cannizzaro 278
Messina, 98122
Italy

Maria Grazia La Spada

University of Messina ( email )

Piazza Pugliatti, 1
Messina, 98122
Italy

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