1932

Abstract

This review evaluates three micro and three macro estimation approaches to determine whether unrealistic differences exist in estimating the size of nonobserved/shadow economies. While some macro-MIMIC estimates are higher than estimates using the statistical discrepancy approach, when adjusting for double-counting, MIMIC approaches provide similar results. Macro approaches usually cover not only typical shadow economy activities, but also voluntary work, do-it-yourself activities, and classical crime activities; by nature, macro approaches will lead to higher and more accurate estimates than micro approaches. However, if certain adjustments are made, the estimated size of the shadow economy using the MIMIC approach comes close to the size of the shadow economy indicated by micro survey approaches. Hence, claims that macro approaches are unrealistically high and rely on unrealistic assumptions must be reconsidered.

Loading

Article metrics loading...

/content/journals/10.1146/annurev-resource-090822-114308
2023-10-05
2024-06-24
Loading full text...

Full text loading...

/deliver/fulltext/resource/15/1/annurev-resource-090822-114308.html?itemId=/content/journals/10.1146/annurev-resource-090822-114308&mimeType=html&fmt=ahah

Literature Cited

  1. Allingham M, Sandmo A. 1972. Income tax evasion: a theoretical analysis. J. Public Econ. 1:3–4323–38
    [Google Scholar]
  2. Alm J, Embaye A. 2013. Using dynamic panel methods to estimate shadow economies around the world, 1984–2006 Work. Pap. 1303, Dep. Econ., Tulane Univ. New Orleans, LA:
    [Google Scholar]
  3. Breusch T. 2016. Estimating the underground economy using MIMIC models. J. Tax. Admin. 2:11–29
    [Google Scholar]
  4. Buehn A, Karmann A, Schneider F. 2009. Shadow economy and do-it-yourself activities: the German case. Z. Gesamte Staatswiss. 165:4701–22
    [Google Scholar]
  5. Buehn A, Schneider F. 2013. A preliminary attempt to estimate the financial flows of transnational crime using the MIMIC method. Research Handbook on Money Laundering B Unger, D van der Linde 172–89. Cheltenham, UK: Edward Elgar
    [Google Scholar]
  6. Burgstaller L, Feld L, Pfeil K. 2022. Working in the shadow: survey techniques for measuring and explaining undeclared work Freiburger Diskuss. Pap. Ordnungsökon. 22/07, Univ Freiburg, Ger:.
    [Google Scholar]
  7. Dell'Anno R. 2021a. Inequality and informality in transition and emerging countries IZA Discuss. Pap 325 Bonn, Ger:.
    [Google Scholar]
  8. Dell'Anno R 2021b. Theoretical approaches to the phenomenon of informality. Dialogues of Socioeconomy II SM Ruesga, J Baquero, JL Delegado 236–59. Madrid: Tirant lo Blanc
    [Google Scholar]
  9. Dell'Anno R. 2023. Measuring the unobservable: estimating the informal economy by a structural equation modelling approach. Int. Tax Public Financ 30:247–77
    [Google Scholar]
  10. Dybka P, Kowalczuk M, Olesiński B, Torój A, Rozkrut M. 2019. Currency demand and MIMIC models: towards a structured hybrid method of measuring the shadow economy. Int. Tax Public Financ. 26:14–40
    [Google Scholar]
  11. Elgin C, Öztunali O. 2012. Shadow economies around the world: model based estimates. Work. Pap. 2012/05, Dep. Econ., Bogazici Univ .
  12. Embaye AB. 2007. Essays on tax evasion and government spending in developing countries PhD Diss., Georgia State Univ. Atlanta:
    [Google Scholar]
  13. Feige EL. 2016a. Professor Schneider's Shadow Economy (SSE): What do we really know? A rejoinder. J. Tax Adm. 2:293–107
    [Google Scholar]
  14. Feige EL. 2016b. Reflections on the meaning and measurement of unobserved economist: What do we really know about the shadow economy?. J. Tax Admin. 2:16–41
    [Google Scholar]
  15. Feld LP, Larsen C. 2005. Black activities in Germany in 2001 and 2004: a comparison based on survey data Study 12, Rockwool Found. Res. Unit Copenhagen:
    [Google Scholar]
  16. Feld LP, Larsen C. 2008.. “ Black” activities low in Germany in 2006. News from the Rockwool Foundation Research Unit March 1–12
    [Google Scholar]
  17. Feld LP, Larsen C. 2009. Undeclared Work in Germany 2001–2007. Impact of Deterrence, Tax Policy, and Social Norms: An Analysis Based on Survey Data Berlin: Springer
    [Google Scholar]
  18. Feld LP, Schneider F. 2010. Survey on the shadow economy and undeclared earnings in OECD countries. Ger. Econ. Rev. 11:2109–49
    [Google Scholar]
  19. Feld LP, Schneider F. 2016. Reply to Gebhard Kirchgässner. Ger. Econ. Rev. 18:1112–17
    [Google Scholar]
  20. Filer R, Hanousek J, Lichard T, Torosyan K. 2016.. “ Flattening” the tax evasion: evidence from the post-communist natural experiment CEPR Discuss. Pap11229
    [Google Scholar]
  21. Frey BS, Weck H. 1983. Estimating the shadow economy: a ‘naive’ approach. Oxf. Econ. Pap. 35:23–44
    [Google Scholar]
  22. Gërxhani K. 2004. The informal sector in developed and less-developed countries: a literature survey. Public Choice 120:3–4267–300
    [Google Scholar]
  23. Gyomai G, van de Ven P. 2014. The non-observed economy in the system of national accounts OECD Stat. Brief 18, Organ. Econ. Co-op. Dev Paris:
    [Google Scholar]
  24. Hashimzade N, Heady C. 2016. Reflections on the meaning and measurement of unobserved economies: an editorial comment. J. Tax Adm. 2:2108
    [Google Scholar]
  25. IfD Allensbach 1975. Studie im Auftrag der Kommission für Wirtschaftlichen und Sozialen Wandel Bodensee, Ger: Allensbach
    [Google Scholar]
  26. Kirchgässner G. 1983. Size and development of the West German shadow economy, 1955–1980. Z. Gesamte Staatswiss. 139:197–214
    [Google Scholar]
  27. Kirchgässner G. 2016. On estimating the size of the shadow economy. Ger. Econ. Rev. 18:199–111
    [Google Scholar]
  28. Langfeldt E. 1984. The unobserved economy in the Federal Republic of Germany. The Unobserved Economy EL Feige 236–60. Cambridge, UK: Cambridge Univ. Press
    [Google Scholar]
  29. Lichard K. 2012. Shadow economy in the Czech Republic, Russia, Slovakia and Ukraine: food Engel curve approach Work. Pap., Prague Univ. Econ. Bus.
    [Google Scholar]
  30. Lichard T, Hanousek J, Filer RK. 2014. Hidden in plain sight: using household data to measure the shadow economy CEPR Discuss. Pap. 10483
    [Google Scholar]
  31. Lichard T, Hanousek J, Filer RK. 2021. Hidden in plain sight: using household data to measure the shadow economy. Empir. Econ. 60:51449–76
    [Google Scholar]
  32. Lippert O, Walker M, eds. 1997. The Underground Economy: Global Evidence of its Size and Impact Vancouver, BC: Frazier Inst.
    [Google Scholar]
  33. Medina L, Jonelis AW, Cangul M. 2017. The informal economy in Sub-Saharan Africa: size and determinants IMF Work. Pap. WP/17/156, Int. Mon. Fund Washington, DC:
    [Google Scholar]
  34. Medina L, Schneider F 2021. The evolution of shadow economies through the 21st century. The Global Informal Workforce: Priorities for Inclusive Growth C Delechat, L Medina 10–69. Washington, DC: IMF
    [Google Scholar]
  35. OECD (Organ. Econ. Co-op. Dev.) 2010. Handbook for Measuring the Non-Observed Economy Paris: OECD
    [Google Scholar]
  36. Putnins T, Sauka A. 2015. Measuring the shadow economy using company managers. J. Comp. Issues 43:2471–90
    [Google Scholar]
  37. Putnins T, Sauka A. 2021. The shadow economy index for the Baltic Countries, 2009–2020 Res. Pap., Stockholm Sch. Econ. Riga:
    [Google Scholar]
  38. Quintano C, Mazzocchi P. 2010. Some alternative estimates of underground economies in 12 new member states. Int. Econ. J. 24:611–28
    [Google Scholar]
  39. Ruge M. 2010. Determinants and size of the shadow economy—a structural equation model. Int. Econ. J. 24:511–23
    [Google Scholar]
  40. Schneider F 2000. The interaction of taxes, transfers and growing shadow economies: What are the causes? An empirical (public choice orientated) analyses. Tax and Transfer Reform in Australia and Germany, Vol. 3 HG Petersen, P Gallagher 319–50. Berlin: Berliner Wissenschaftsverlag
    [Google Scholar]
  41. Schneider F. 2005. Shadow economies around the world: What do we really know?. Eur. J. Political Econ. 21:4598–642
    [Google Scholar]
  42. Schneider F. 2016. Comment on Feige's paper ‘Reflections on the meaning and measurement of unobserved economies: What do we really know about the shadow economy?. J. Tax. Admin. 2:282–92
    [Google Scholar]
  43. Schneider F. 2017. Estimating a shadow economy: results, methods, problems, and open questions. Open Econ. 2017:1–29
    [Google Scholar]
  44. Schneider F. 2022. New COVID-related results for estimating the shadow economy in the global economy in 2021 and 2022. Int. Econ. Econ. Policy 19:2299–313
    [Google Scholar]
  45. Schneider F, Buehn A. 2007. Shadow economies and corruption all over the world: new estimates for 145 countries. Economics 1:1–53
    [Google Scholar]
  46. Schneider F, Buehn A, Montenegro CE. 2010. New estimates for the shadow economies all over the world. Int. Econ. J. 24:4443–61
    [Google Scholar]
  47. Schneider F, Enste D. 2000. Shadow economies: size, causes, and consequences. J. Econ. Lit. 38:177–114
    [Google Scholar]
  48. Tanzi V. 1983. The underground economy in the United States: annual estimates, 1930–1980. Staff. Pap. Int. Monet. Fund 30:283–305
    [Google Scholar]
  49. Torgler B, Schneider F 2007. Multicultural European countries. Soc. Sci. Q. 88:2443–70
    [Google Scholar]
  50. Torgler B, Schneider F. 2009. The impact of tax moral and institutional quality on the shadow economy. J. Econ. Psychol. 30:2228–45
    [Google Scholar]
  51. Weck-Hannemann H. 1983. Schattenwirtschaft: Eine Möglichkeit zur Einschränkung der öffentlichen Verwaltung? Eine Ökonomische Analyse Frankfurt-am-Main: Peter Lang
    [Google Scholar]
  52. Williams CC, Bejakovic P, Mikulic D, Franic J, Kedir A, Horodnic IA. 2017. An evaluation of the scale of undeclared work in the European Union and its structural determinants: estimates using the labour input method Rep., Eur. Comm., Brussels
    [Google Scholar]
  53. Williams CC, Kosta B. 2021. Why do consumers buy from informal sector suppliers in East-Central Europe? A case study of home repair and renovation services. Econ. Altern. 1:134–52
    [Google Scholar]
  54. Williams CC, Schneider F. 2016. Measuring the Global Shadow Economy: The Prevalence in Formal Work and Labor. Cheltenham, UK: Edward Elgar
    [Google Scholar]
  55. Zukauskas V, Schneider F. 2016. Microbased results of shadow labour market in the Baltic States, Poland and Sweden. Appl. Econ. Syst. Res. 10:2117–33
    [Google Scholar]
/content/journals/10.1146/annurev-resource-090822-114308
Loading
/content/journals/10.1146/annurev-resource-090822-114308
Loading

Data & Media loading...

  • Article Type: Review Article
This is a required field
Please enter a valid email address
Approval was a Success
Invalid data
An Error Occurred
Approval was partially successful, following selected items could not be processed due to error