Defining and Estimating Underground and Informal Economies: The New Institional Economics Approach

World Development, Vol 18, No 7, 1990

29 Pages Posted: 14 Jun 2016

See all articles by Edgar L. Feige

Edgar L. Feige

University of Wisconsin - Madison - Department of Economics

Date Written: June 10, 2016

Abstract

A taxonomy of underground economies is elaborated based on the new institutional approach to economic development. Members of formal sectors confront different sets of transformation and transaction costs than do members of informal sectors and these differences are regarded as crucial to the development process. The paper distinguishes illegal, unreported, unrecorded and informal economies and examines the conceptual and empirical linkages among them. Alternative micro and macro methodologies for measuring underground activities are reviewed and evaluated including census and survey procedures, discrepancies and monetary methods.

Keywords: Underground, unrecorded, unreported, informal, illegal, unobserved, hidden, shadow economy, transaction costs, monetary methods

JEL Classification: O17, H26, H2, K42, D72, H3

Suggested Citation

Feige, Edgar L., Defining and Estimating Underground and Informal Economies: The New Institional Economics Approach (June 10, 2016). World Development, Vol 18, No 7, 1990. Available at SSRN: https://ssrn.com/abstract=2794086

Edgar L. Feige (Contact Author)

University of Wisconsin - Madison - Department of Economics ( email )

1180 Observatory Drive
Madison, WI 53706
United States

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