Estimating the Shadow Economy in Italy: A Structural Equation Approach

U of Aarhus, Economics Working Paper No. 2003-7

Posted: 6 Aug 2003

See all articles by Roberto Dell'Anno

Roberto Dell'Anno

University of Salerno - Dept. of Economics and Statistics; Centre of Labour Economics and Economic Policy (CELPE)

Abstract

The aims of this paper are, firstly, to estimate the Italian shadow economy by means of a structural equation approach and, secondly, to verify the generality of the main criticisms about the reliability of the "MIMIC method" (or model approach) for this kind of analysis. Using the Italian shadow economy, I will show how only some of these are confirmed, others exist as a consequence of the model implementation and sample and some more will exposed to question this methodology. Particular attention is paid to detect the assumptions that should be respected to use appropriately this technique (test of multinormality, independence between measurement and structural errors, unit root detection, etc.). According to the obtained results, is confirmed a sufficient reliability of this approach for the estimate of the size of underground economy.

Keywords: Shadow Economy, Structural Equation Model, Tax Evasion

JEL Classification: O17, C39, H26

Suggested Citation

Dell'Anno, Roberto, Estimating the Shadow Economy in Italy: A Structural Equation Approach. U of Aarhus, Economics Working Paper No. 2003-7, Available at SSRN: https://ssrn.com/abstract=411443

Roberto Dell'Anno (Contact Author)

University of Salerno - Dept. of Economics and Statistics ( email )

Centre of Labour Economics and Economic Policy (CELPE)

Università di Salerno
Via ponte don Melillo
Fisciano, SA 84084
Italy

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