Shadow Economies Around the World: What Do We Know?

63 Pages Posted: 18 Mar 2004

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)

Robert Klinglmair

University of Linz

Date Written: March 2004

Abstract

Using various statistical procedures, estimates about the size of the shadow economy in 110 developing, transition and OECD countries are presented. The average size of the shadow economy (in percent of official GDP) over 1999-2000 in developing countries is 41%, in transition countries 38% and in OECD countries 18.0%. An increasing burden of taxation and social security contributions combined with rising state regulatory activities are the driving forces for the growth and size of the shadow economy. If the shadow economy increases by one percent the annual growth rate of the "official" GDP of a developing country (of a industrialized and/or transition country) decreases by 0.6% (increases by 0.8 and 1.0 respectively).

Keywords: shadow economy, interaction of the shadow economy with the official one, tax burden

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

Suggested Citation

Schneider, Friedrich G. and Klinglmair, Robert, Shadow Economies Around the World: What Do We Know? (March 2004). Available at SSRN: https://ssrn.com/abstract=518526

Friedrich G. Schneider (Contact Author)

Johannes Kepler University Linz - Department of Economics ( email )

Altenbergerstrasse 69
A-4040 Linz, 4040
Austria
+43 732 2468 8210 (Phone)
+43 732 2468 8208 (Fax)

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

Robert Klinglmair

University of Linz ( email )

Altenbergerstr. 69
A-4040 Linz, Uper Austria 4040
Austria

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