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Journal of Economic Literature: Vol. 38 No. 1 (March 2000)

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Shadow Economies: Size, Causes, and Consequences

Article Citation

Schneider, Friedrich, and Dominik H. Enste. 2000. "Shadow Economies: Size, Causes, and Consequences." Journal of Economic Literature, 38(1): 77-114.

DOI: 10.1257/jel.38.1.77

Abstract

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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Authors

Schneider, Friedrich (Johannes Kepler U Linz)
Enste, Dominik H. (U Cologne)

JEL Classifications

E10: General Aggregative Models: General
O17: Formal and Informal Sectors; Shadow Economy; Institutional Arrangements


Journal of Economic Literature


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