Labor Market Segmentatation and the Development of the Parallel Economy—the Italian Experience

Using various methods, the size of the shadow economy in 76 developing, transition, and OECD countries is estimated. Average size varies from 12 percent of GDP for OECD countries, to 23 percent for transition countries and 39 percent for developing countries. Increasing taxation and social security contributions combined with rising state regulations are driving forces for the increase of the shadow economy, especially in OECD countries. According to some findings, corruption has a positive impact on the size of the shadow economy, and a growing shadow economy has a negative effect on official GDP growth.

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“…Such studies have been done for Italy (Bruno Contini 1981Del Boca 1981) and for the United States (David M. O'Neill 1983).…”

Section: Discrepancy Between Official and Actual Labor Forcementioning

confidence: 99%

Shadow Economies: Size, Causes, and Consequences

Schneider

Enste

2000

Journal of Economic Literature

2,107

1,502

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“…36) A related approach is pursued by Pissarides and Weber (1988), who use micro data from household budget surveys to estimate the extend of income understatement by self-employed. 37) Such studies have been made for Italy, see e.g., Contini (1981) and Del Boca (1981); for the United States, see O'Neill (1983), for a critical survey, see again Thomas (1992). 38) For an extended description of this approach, see Feige (1996); for a further application for the Netherlands, Boeschoten and Fase (1984), and for Germany, Langfeldt (1984).…”

Section: The Transactions Approachmentioning

confidence: 99%

Shadow economies around the world: what do we really know?

Schneider

2005

European Journal of Political Economy

916

805

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in

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“…An increase in the size of the shadow economy will therefore increase the demand for currency. To isolate the resulting excess 14 Such studies have been made for Italy, see for example Contini (1981) and Del Boca (1981); for the United States, see O'Neill (1983), for later studies, see Williams (2009Williams ( , 2013, Williams and Lansky (2013), and Williams and Rodgers (2013), for a critical survey, see again Thomas (1992). 15 For an extended description of this approach, see Feige (1996); for a further application to the Netherlands, Boeschoten and Fase (1984), and to Germany, Langfeldt (1984).…”

Section: The Currency Demand Approachmentioning

confidence: 99%

Shadow Economy: Estimation Methods, Problems, Results and Open questions

Schneider

Buehn²

2018

Open Economics

154

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This paper presents various methods used for estimating the size of the shadow economy. Each method is evaluated and its strengths and weaknesses are discussed, as well as results each method yields. The purpose of the paper is threefold: Firstly, to demonstrate that there is no single infallible method for estimating the size and development of the shadow economy and results can differ significantly between different approaches. The MIMIC approach, discussed in greater detail, is often used due to its flexibility. Secondly, the paper discusses the very definition of the shadow economy and factors contributing to its growth. Finally, latest estimations of the size of the shadow economies of 143 countries over the period 1996 to 2014 are presented. JEL-Classification: D78, E26, H2, H11, H26, K42, O5, O17Keywords: shadow economy estimates, MIMIC approach, methods to estimate the shadow economy, advantages and disadvantages of the methods, MIMIC-method, calibration procedure, light intensity approach IntroductionEmpirical research about the size and development of the shadow economy all over the world has grown rapidly. Nowadays, there are so many studies,1 which use different methods in order to estimate the size and development of the shadow economy, that it is quite difficult to judge the reliability of various methods. Hence, the goal of this paper is to critically review the various methods for estimating the size of the shadow economy and to discuss their strengths and weaknesses. This will enable an interested reader to evaluate the advantages and disadvantages of the different methods.The paper is structured as follows: In the next section some theoretical considerations are presented, starting with a definition of the shadow economy and a brief discussion of its main causes. In section 3 the various measurement methods, as well as their strengths and weaknesses, are described. This section also presents estimates of the size of the shadow economy in Germany using different estimation methods. Section 4 presents some latest developments, new measurement methods, the concept of digital shadow economy, and latest results from 143 countries between 1996 and 2014. Finally, section 5 presents a summary and some concluding remarks.1 See e.g. Feld and Schneider (2010), Gerxhani (2003), Schneider (2015), and Schneider and Williams (2013), Schneider (2016, Schneider (2016), andSauka, Schneider and Defining the shadow economyResearchers attempting to measure the size of shadow economy face the first and difficult question of how to define it.2 One commonly used working definition encompasses all currently unregistered economic activities that would contribute to the officially calculated (or observed) Gross National Product if observed.3 Smith (1994, p. 18) uses the definition "market-based production of goods and services, whether legal or illegal, that escapes detection in the official estimates of GDP." One of the broadest definitions includes "those economic activities and the income derived from them ...

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Labor Market Segmentatation and the Development of the Parallel Economy—the Italian Experience

Cited by 83 publications

References 1 publication

Shadow Economies: Size, Causes, and Consequences

Shadow Economies: Size, Causes, and Consequences

Shadow economies around the world: what do we really know?

Shadow Economy: Estimation Methods, Problems, Results and Open questions

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