The Role of Informal Economies in the Post-Soviet World

Williams, Colin C.; Round, John; Rodgers, Peter

doi:10.4324/9780203768969

Cited by 91 publications

(70 citation statements)

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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

151

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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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Section: The Currency Demand Approachmentioning

confidence: 99%

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

Schneider

Buehn²

2018

Open Economics

151

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“…As such, people viewed blat as a way of 'getting things done' and, importantly, without any obligation to compensate for the assistance provided. Correspondingly, by representing an accumulation of symbolic capital, the ability to assist friends through a strong blat network conferred prestige and social status (Williams et al 2013).…”

Section: The Role Of Blatmentioning

confidence: 99%

Leveraging symbolic capital: the use of blat networks across transnational spaces

et al. 2018

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“…In Latvia, 20 per cent of declared employees in the private sector were found to have received an envelope wage from their formal employer [27]. In Ukraine, meanwhile, 30 per cent of all declared employees in the three localities reported receiving an envelope wage [28], whilst in Moscow survey this figure was 65 per cent and the size of the envelope wage ranged from 20 to 80 per cent of their gross wage packet [29]. In most cases, moreover, the finding is that such envelope wages were not paid for overtime or extra work conducted.…”

Section: Explaining Under-declared Wages: a Lit-erature Reviewmentioning

confidence: 99%

Evaluating Cross-National Variations in Under-Declared Wages in the European Union: an Exploratory Study

Williams

2013

TOARSJ

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Abstract:In recent years, there has been a growing recognition that some employers illegitimately under-declare employees' salaries by paying an undeclared ('envelope') wage in addition to their official declared salary. The aim of this paper is to evaluate critically the competing perspectives that variously explain the cross-national variations in the propensity of employers to under-declare wages to be: simply a legacy of under-development (modernisation perspective); due to high taxes, state corruption and burdensome regulations and controls (neo-liberal perspective), or a result of inadequate state intervention in work and welfare arrangements which leaves workers less than fully protected (structuralist perspective). Reporting the results of a 2007 Eurobarometer involving 26,659 face-to-face interviews across the 27 member states of the European Union (EU-27) to evaluate the prevalence, size and nature of envelope wage arrangements across the EU-27, this exploratory study reveals that envelope wages are more common, larger and more likely to be for regular work in poorer, more corrupt and less equal nations with lower levels of taxation, state intervention in the labor market, social protection and redistribution via social transfers. The paper concludes by discussing both the theoretical and policy implications.

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The Role of Informal Economies in the Post-Soviet World

Cited by 91 publications

References 0 publications

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

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

Leveraging symbolic capital: the use of blat networks across transnational spaces

Evaluating Cross-National Variations in Under-Declared Wages in the European Union: an Exploratory Study

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