Estimating the Size of the Shadow Economy: Methods, Problems and Open Questions

42 Pages Posted: 21 Mar 2016

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)

Andreas Buehn

University of Cooperative Education Bautzen

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Abstract

This paper presents various methods for estimating the size of the shadow economy and analyzes their strengths and weaknesses. The purpose of the paper is twofold. Firstly, it demonstrates that no ideal method exists to estimate the size and development of the shadow economy. Because of its flexibility, the MIMIC method used to get macro-estimates of the size of the shadow economy is discussed in greater detail. Secondly, the paper focuses on the definition and causal factors of the shadow economy and provides a comparison of the size of the shadow economy using different estimation methods.

Keywords: MIMIC approach, methods to estimate the shadow economy, advantages and disadvantages of the measurement methods, shadow economy estimates

JEL Classification: D78, E26, H2, H11, H26, K42, O5, O17

Suggested Citation

Schneider, Friedrich G. and Buehn, Andreas, Estimating the Size of the Shadow Economy: Methods, Problems and Open Questions. IZA Discussion Paper No. 9820, Available at SSRN: https://ssrn.com/abstract=2750303

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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Andreas Buehn

University of Cooperative Education Bautzen ( email )

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Bautzen, 02625
Germany

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