The Shadow Economy: An International Survey

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Illicit work, social security fraud, economic crime, and other shadow economy activities are fast becoming an international problem. Friedrich Schneider and Dominik H. Enste use currency demand, physical input (electricity) method, and the model approach, to estimate the size of the shadow economy in seventy-six developing, transition, and OECD countries. They argue that during the 1990s the average size of a shadow economy varied from 12% of GDP for OECD, to 23% for transition, and to 39% for developing countries. They examine the causes and consequences of this development using an integrated approach explaining deviant behaviour, which combines the findings of economic, sociological, and psychological research. The authors suggest that increasing taxation, social security contributions, rising state regulatory activities, and the decline of the tax morale, are all driving forces behind this growth, especially in OECD countries. They propose a reform of state (public) institutions, in order to improve the dynamics of the official economy.
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Editorial Reviews

From the Publisher
'This second edition (incorporating the most recent data) is highly recommended; it is THE book on the shadow economy.' Bruno S. Frey, Distinguished Professor of Behavioural Science, University of Warwick

'Shadow economy hides behind official labor and business. Boundaries between the official and unofficial economy are fuzzy and research scholars engage in lively debates about the validity of methods to estimate the size of shadow economy. This book provides an excellent theoretical frame to investigate shadow economy from a socio-economic perspective and highly relevant empirical data which allow (the reader) to draw practical conclusions for political interventions to combat growing economic crime.' Erich Kirchler, University of Vienna

'The authors ingeniously measure the non-measurable and remove the shadows from our economies. Great research, great book.' Hans-Werner Sinn, President, Ifo Institute for Economic Research

'The welfare of nations cannot be judged without understanding the size of the informal sector. This extremely valuable contribution provides a rigorous treatment of the subject and will become the standard reference book of the shadow economy.' Klaus F. Zimmermann, University of Bonn and Director of IZA, the Institute for the Study of Labor

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Product Details

  • ISBN-13: 9780521814089
  • Publisher: Cambridge University Press
  • Publication date: 3/17/2003
  • Pages: 238
  • Product dimensions: 5.98 (w) x 8.98 (h) x 0.87 (d)

Meet the Author

Friedrich Schneider is Professor of Economics of the Johannes Kepler University of Linz, Austria. He was the European editor of Public Choice from 1991 to 2004 and he has published extensively in leading economic journals including The Quarterly Journal of Economics, The American Economic Review, The Economic Journal and Kyklos.

Dominik H. Enste is Head of the Department of Institutional and Behavioral Economics at the Cologne Institute for Economic Research. He is also Professor of Economics and Ethical and Behavioral Economics at the University of Applied Science and Lecturer at the University of Cologne. His main research focuses on institutional and ethical economics/business ethics and behavioral economics. He has published several books and articles, in publications such as The Journal of Economic Literature and Constitutional Political Economy.

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Table of Contents

List of figures
List of tables
1 The shadow economy: a challenge for economic and social policy 1
2 Defining the shadow economy 6
3 Methods to estimate the size of the shadow economy 15
4 Size of shadow economies around the world 29
5 The size of the shadow economy labour force 43
6 An integrated approach to explain deviant behaviour 54
7 Analysing the causes and measures of economic policy 102
8 Effects of the increasing shadow economy 155
9 The 'two-pillar strategy' 178
10 Conclusion and outlook 190
List of references 194
Index 215
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