Size and Development of the Shadow Economy and of Do-it-Yourself Activities in Germany

51 Pages Posted: 25 Jun 2007

See all articles by Andreas Buehn

Andreas Buehn

University of Cooperative Education Bautzen

Alexander Karmann

Technische Universitaet Dresden

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)

Date Written: June 2007

Abstract

This paper presents the first MIMIC (multiple indicator multiple causes) model estimate of the size and development of the shadow economy and of do-it-yourself (DIY) activities in Germany from 1970 to 2005. By 2005, they reached a level of about 17% and 4.94%. While the shadow economy has regularly increased over the years, DIY activities - though quite sizeable - have remained more or less constant since the early 1990s. The driving forces for the shadow economy are regulation and tax burden whereas for DIY activities, the level of unemployment is the main factor.

Keywords: shadow economy, do-it-yourself activities, tax burden, regulation, domestic currency in circulation, unemployment, MIMIC models

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

Suggested Citation

Buehn, Andreas and Karmann, Alexander and Schneider, Friedrich G., Size and Development of the Shadow Economy and of Do-it-Yourself Activities in Germany (June 2007). CESifo Working Paper Series No. 2021, Available at SSRN: https://ssrn.com/abstract=995414

Andreas Buehn

University of Cooperative Education Bautzen ( email )

Loebauer Strasse 1
Bautzen, 02625
Germany

Alexander Karmann

Technische Universitaet Dresden ( email )

Muenchner Platz 1- 3
Dresden, 01069
Germany

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)

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Munich, DE-81679
Germany

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

Institute for the Study of Labor (IZA)

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Bonn, D-53072
Germany

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