Shadow Economies Around the World: Size, Causes and Consequences

71 Pages Posted: 23 Aug 2001

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)

Dominik Enste

University of Cologne - Department of Economics

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Date Written: September 1999

Abstract

Using various methods (currency demand, physical input (electricity) method, model approach), which are discussed and criticized, estimates of the size of the shadow economy in 76 developing, transition and OECD-countries are presented. The average size of a shadow economy varies from 12 percent of GDP for OECD, to 23 percent for transition and to 39 percent for developing countries. An increasing burden of taxation and social security contributions combined with rising state regulatory activities are the driving forces for the increase of the shadow economy especially in OECD-countries. According to some findings, a growing shadow economy has a negative effect on official GDP growth, and a positive impact of corruption on the size of the shadow economy can be found.

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

Suggested Citation

Schneider, Friedrich G. and Enste, Dominik, Shadow Economies Around the World: Size, Causes and Consequences (September 1999). Available at SSRN: https://ssrn.com/abstract=272624

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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Munich, DE-81679
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HOME PAGE: http://www.CESifo.de

Institute for the Study of Labor (IZA)

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Bonn, D-53072
Germany

Dominik Enste

University of Cologne - Department of Economics ( email )

Cologne, 50923
Germany

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