research paper on underground economy

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The causes and consequences of this worldwide phenomenon

This paper highlights the sources of payments problems in less developed countries. Growth in the industrial countries has a direct impact on the current account of the developing countries through its influence on both the prices and volumes of their exports. An increase in the real effective exchange rate is clearly a fundamental determinant of a deteriorating current account since, other things being equal, it tends to raise domestic demand for imports and to reduce foreign demand for exports.

In recent years, a growing number of observers of the economic scene have called attention to a phenomenon described by a variety of terms, of which the most common is “underground economy.” A range of names are used to describe this phenomenon, including “parallel,” “unofficial,” and “black.” Regardless of the appellation, the phenomenon relates to activities ranging from relatively legal to totally criminal that somehow escape official attention and may distort official statistics and lead to erroneous policies.

The underground economy—as its plethora of names suggests—can be defined in various ways. If the relevant agency to which activities are not reported is the tax or customs authority, the definition is tax-related. If the relevant agency is the national accounts authority, then we get a definition that relates to the national accounts. More specifically, the underground economy can be defined either as the total of incomes earned, but not reported to the tax authorities, or as the total of incomes not included in the national accounts. There may be no close connection between these two definitions; an activity may not be reported to the tax authorities but may still be assessed by the national accounts offices if, for instance, national accounts data are compiled independently from tax data. Vice versa , there could be cases where some activities come to the attention of the tax authorities but not of the national accounts authorities. In this connection it should be realized that, depending on the country, the national accounts may be based more or less on tax information. For example, in the United States it is reported that only 6 percent of national income is based on information provided by the tax authorities.

In a well-working market economy, without a public sector, there would be no underground activities. Incentives for the growth of these activities increase with greater regulation of the economy, larger public sectors, and higher levels of taxation. The factors that stimulate underground activities can be classified under four different headings: taxes, regulations, prohibitions, and bureaucratic corruption, although in several cases, underground economic activities may have been brought into existence by more than one factor.

Taxes. The tax factor has been emphasized in most studies of the underground economy, and particularly in those dealing with the United States, the United Kingdom, and the Scandinavian countries. In recent years, the share of total taxes in the gross national product of many countries has increased substantially, reaching in some cases 50 percent. Further, the marginal tax rates associated with these taxes have been even higher. As tax rates increase, so does the incentive to evade them. When tax rates are high, the cost of honesty also becomes high, and many taxpayers who, under lower tax burdens, would have been honest, make the transition to tax evasion, even though in some cases only for parts of their incomes.

It is not just the level of the tax rates that is important, but also the general mood of compliance that prevails in a country. This mood may itself be affected by perceptions about the public sector—if these are that public expenditure is wasteful or that the tax burden is inequitably distributed, there may be a tendency not to participate in “above-ground” activities. Further, when tax administration is good and the penalties for evasion significant, high marginal tax rates may not lead to a high level of underground economic activity. Thus, when the attitude vis-à-vis the government and its tax and expenditure policies is negative, when the tax rates are high, and when tax administration is poor, underground economic activity is likely to flourish.

Different taxes may stimulate these activities more in one country than in another. In the United States, the major cause of the underground economy has generally been assumed to be high income tax rates. As a consequence, the studies dealing with this country have emphasized that aspect. In other countries, and perhaps to a more limited extent even in the United States, social security taxes have also been important. In fact, it is likely that these taxes, which in some countries have achieved a very high level, may have been more important than the income taxes. Both of these taxes may bring about a kind of black market for labor; if workers can be hired without the payment of income taxes or social security contributions, they can be paid lower wages. The worker may gain, as the wage he receives will be free of income tax and of the employee’s contribution to social security, and the employer will gain by the lower wage bill and by not paying his share of the social security tax.

Much of the material in this article is based on the author’s book , The Underground Economy in the United States and Abroad (Lexington books, 1982), which covers the United States, the United Kingdom, Italy, Norway, Sweden, the U.S.S.R., Canada, Colombia, Australia, and Israel. The estimates in the chart for these countries come from the book and from other published articles .

Sales taxes also contribute to underground economic activities. The value-added tax, for example, is reported to have brought about a proliferation of small and difficult-to-control enterprises that produce services or goods sold net of taxes. For some countries (for example, Italy and Argentina) there are estimates assessing the value-added tax evasion at 50 percent. It is, thus, a fair question to ask whether the evading activity is being properly measured in the national accounts.

For developing countries, other types of taxes are also important factors. Countries that impose high import duties, which in some cases exceed 100 percent, provide strong incentives to smugglers to bring those goods into the country without going through the customs offices. The higher the import duty, and the smaller, more easily transportable, and more valuable the product, the greater is the incentive to smuggle it into the country. As a consequence, smugglers make considerable gains from this activity and these gains are difficult to measure. Estimates for some countries indicate that they can be enormous. Export duties are another major cause of these activities. The coffee producers who smuggle coffee out of the country; the cattle raisers who simply cross the frontier with their cattle to sell them abroad; and the diamond or emerald miners who take their finds abroad are all avoiding export taxes and making profits that are not likely to be properly measured. Even capital gains and capital transfer taxes may induce those engaging in the transfer or sale of property to underassess for tax purposes the value of their property. In all of these cases, activities may have been brought into existence, or channels of distribution may have been created, or economic relationships may have been changed because of the taxes. The end result is higher incomes for some, lower tax revenue for governments, and highly distorted statistics.

Regulations. By and large, the more regulated an economy, the greater will be the pressures within it to try to get around the regulations. In the process, various activities that cannot be controlled will come into existence; these will, to some extent, invalidate the objectives of the regulations and will be associated with the phenomenon of the underground economy. The regulations may relate to labor markets, goods markets, domestic financial markets, and foreign exchange markets.

The regulation of the labor market may include laws pertaining to minimum wages, overtime, and the work of minors, aliens, retirees, and working women. Many of these are circumvented or ignored. In the process, output is produced, incomes generated, and labor utilized in ways not desired, or even contemplated, by the government. In many cases a black market for labor develops.

Goods markets regulations include price controls, rationing, forced sales of commodities to the government or to marketing boards, import quotas, and export bans. All of these may generate a black market for goods as both producers and consumers try to escape the effects of these regulations by developing parallel or hidden markets. Again, the end result is the creation of unreported incomes, the distortion of measured levels of activity, and a loss of tax revenue. In the United States, the regulation of goods markets during the prohibition era and during World War II brought about widespread attempts at circumventing them. Available estimates indicate that underground economic activities were larger during World War II than in any subsequent period. Black markets for goods have reached epidemic proportions in some highly regulated African countries, and the same is reported to be occurring in some centrally planned economies of Europe.

Regulations of domestic financial markets are often associated with constraints on interest rates and with credit controls. When these regulations of domestic financial markets exist, a black market for money, sometimes called a curb market, develops. In this case, interest received by lenders is for the most part unreported to the tax authorities and the extent to which it is properly reflected in the national accounts is an open question.

Examples of regulations of foreign exchange markets abound. These are connected with the exchange rates, which may be widely out of line from the equilibrium level, or with capital controls. Distorted exchange rates, together with capital controls, are generally accompanied by attempts at getting around them. Obvious examples of this type are the overinvoicing of imports, which allows an importer to get some exchange at official rates and to leave some of this money abroad, or to sell it in the black market. Another example is the underinvoicing of exports. The exporter’s objective is to end up with unreported foreign exchange that can be kept abroad or can be sold in the black market domestically. In all these cases, a black market for currency exists in parallel with the official market. The exchange rates in the two markets can be significantly different, sometimes by as much as a ratio of ten to one. Again, untaxed incomes are created and economic statistics distorted as the relevant authorities are unable to tax those incomes and do not have the full range of information necessary to put out accurate statistics.

Prohibition. In all countries some activities are forbidden by law. To the extent that individuals wish to engage in them, these will inevitably go underground. There are many such activities, including traffic in illegal drugs, illegal gambling, lending at extortionate rates, and so on. As long as individuals engage voluntarily in these activities, they can be deemed to generate incomes to some people and services to others. For example, illegal drugs imported into a country and sold in the street can generate phenomenal incomes, as the street value is likely to be far higher than the value at which they are bought at the place of origin.

It is an open question, and a source of considerable controversy, whether the incomes generated by these activities should be measured in the gross national product of a country. Traditionally, incomes measured by the national accounts have not included those generated by criminal activities. In addition, if these activities were discovered and taxed, they would largely disappear, so that it is also controversial whether even the tax definition of underground economy should include incomes generated in these activities. On the other hand, one can take the position that they should be included, on the grounds that as long as people purchase these services freely, they are in some sense better off because of them. Moreover, the sellers of these services are earning incomes and using scarce resources, which, if used elsewhere, could increase the official gross national product. Only if the resources used in these activities would otherwise be completely unutilized would they have had no opportunity cost associated with them.

In the United States, for which some estimates have been made, these illegal activities are reported to range somewhere between one third and one half the size of the underground economy associated with legal activities. But, of course, in view of the difficulty of finding any accurate information in this area, these are very unreliable estimates. The value of these activities depends to a large extent on the fact that they are prohibited. For example, legalizing narcotics would almost immediately sharply reduce their value; therefore, the incomes that the sellers of these drugs receive would also fall sharply.

Bureaucratic corruption. In all countries, some public employees find themselves in control of powers that can be used to generate private gains. This private use of public power is obviously improper and frequently illegal, but it is a fact of life in some countries, and examples abound in the literature and in newspapers. In particular countries, for example, it has been reported that government jobs are sometimes literally sold by individuals with the power to dispose of them. In other countries, government contracts are awarded to individuals who are willing to make an under-the-table contribution to strategically located public employees. In still others, where economic activities may require specific licenses, acquiring a license, or, at times, acquiring a license without excessive delay, may be achieved in exchange for under-the-table payments. Licenses for investments, imports, construction, and waivers from particular regulations, or even obtaining public services which, because of supply bottlenecks, are not readily available (such as telephones), can often be obtained by literally purchasing the license, the waiver, or the service from the right person.

The argument has been made that in some countries this payment to a certain extent compensates the public employees for low wages and oils the bureaucratic mechanism by introducing some spurious sort of efficiency. The common denominator of these activities is that they all generate incomes for some people and these incomes are not reported to the authorities. They are not likely to be taken fully into account by those who generate national statistics.

Consequences

The existence of a sizable and possibly growing underground economy has obvious consequences that may or may not be serious, and it raises issues of equity, economic policy, and efficiency. This article cannot engage in a full discussion of these issues, but will make a brief reference to them.

Equity. The issue of equity is particularly significant in the distribution of the tax burden and incomes. The fact that some people receive incomes that are not taxable implies that to raise a given level of tax revenues, the tax rate on officially recognized activities will have to be higher. Further, even when the economy expands because of underground economic activities, the need for additional public services will go up. For example, those who live on underground incomes still use roads and still send children to school. The reduction in tax revenues and the increase in the need for additional public expenditure as a result of these activities is an aggravation of fiscal difficulties. Equity considerations arise also in connection with income distribution, as very large incomes may be made in connection with underground activities, which may distort the distribution of income that the government wants to achieve.

Policymaking. The implications of underground economic activities for economic policy are perhaps more serious. A large underground economy will inevitably be associated with greater difficulty in properly assessing the size of variables that are important for policymaking. For example, if the underground economy is growing faster than the official economy, and is not properly measured by the national accounts authorities, the rate of growth of the country will be underestimated. This could lead to policies that, on the basis of what is officially known about the economy, seem appropriate but are actually overly expansionary.

Measuring the underground economy

Economists have been very resourceful in devising different methods for estimating the size of the underground economy. One method is based on attempts to measure directly the various activities that make up this phenomenon, and, through a process of aggregation, the calculation of the total. This method has been used mainly in the United States. Its main weakness is that many underground economic activities are not observable.

A second method, which has given interesting results for Norway and Sweden, includes the use of questionnaires to elicit answers from persons interviewed as to whether they have participated in these activities either as buyers or as sellers. In the case of noncriminal activities, selling the service may imply violation of some law; buying the service does not. Therefore, if the answers received from the buyers give more or less the same magnitude for underground economic activities as the answers received from the sellers, one can have some confidence in them.

A third method, which has been applied in Italy, is based essentially on the difference between the population that, on the basis of demographic data, could be assumed to be part of the labor force and those who officially report to be part of it. These estimates need to be accompanied by some assumptions about productivity in the underground sector. A fourth method, used in the United States and in the United Kingdom, has attempted to estimate the size of the underground economy by comparing the official estimates of the gross national product made from the consumption side with those made from the incomes side. The assumption is that underground economic activities would affect only the income estimations of national product. There are difficulties with this method, as the underground economy is likely to affect both consumption as well as incomes. Thus, some studies of the United Kingdom have attempted to estimate the underground economy by analyzing household budget studies for unusual levels of consumption corresponding to given reported income.

Many studies for a large number of countries have also attempted to measure the activities in question by analyzing monetary statistics, on the assumption that certain monetary aggregates—for example, currency or currency in large bills—may be directly influenced by the size of the underground economy. Still other methods have related electricity use to official output for a region or a town. If the electricity used is much higher than one would expect from the official production level, one can assume that unofficial production is taking place.

Whatever method is used to estimate the magnitude of the underground economy, it is evident that it is considerable. The accompanying chart provides some available estimates from studies of the underground economy for 19 countries from various parts of the world and with different social systems. Many of these studies indicate that the underground economy is not only sizable but is also growing faster than the official economy. The figures shown in the chart should be accepted with considerable caution as they are the result of applying different methodologies and, in some cases, even of different concepts. Therefore, it would not be prudent to make precise cross-country comparisons without first consulting the studies themselves. As research techniques and factual information improve, it will probably become easier to generate estimates that warrant a greater degree of confidence.

Estimated size of underground economy 1

Citation: Finance & Development 20, 004; 10.5089/9781616353551.022.A003

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The official unemployment rate may also be distorted. If people working in the underground economy are listed as unemployed, the unemployment rate will appear higher than it actually is. This again may induce the government to pursue expansionary policies when, in fact, the real rate of unemployment may be much closer to the full-employment rate than the official rate would indicate. For the United States some have argued that the actual unemployment rate may be more than 2 percent lower than the official rate.

The rate of inflation may also be distorted if the underground economy is growing faster than the above-ground one in countries where the services of the former are rendered at lower prices. In this case, the measured rate of inflation may be higher than the real rate. In addition, if the underground economy is connected with black markets for goods, then the reverse may occur, as scarcity of goods in the official economy brought about by price control or rationing may bring about much higher prices in the black market economy. In this case, the official price index is likely to be much lower than the real price index.

The balance of payments statistics, too, are likely to be distorted in the presence of an underground economy, as many capital and commodity flows will not be properly measured. Once again, economic policies based on the official statistics may not be the right ones. The tax burden of a country, as well as the share of public expenditure in gross national product, will be distorted, as total taxes or total public expenditure will be divided by only the officially measured and thus lower gross national product. Therefore, that ratio will appear higher than it actually is. Official statistics on income distribution, as already stated, will also be distorted as those actively engaged in the underground economy may appear poorer than they actually are.

Monetary policy may be distorted if the growth of money is related only to the growth of the official gross national income. If incomes in the underground economy are growing faster than this, then the rate of monetary expansion, determined in relation to the official economy, may be too low for the needs of the total economy. This discussion should be sufficient to emphasize the importance of studying this phenomenon, since economic policy in most countries is strongly influenced by the behavior of the officially measured macroeconomic variables.

Efficiency. The issue of efficiency can be approached from different angles. This is, however, a complex issue that would require far more time for a satisfactory treatment. In general, if the underground economy is caused by taxation alone, one will find that, ceteris paribus , resources (both capital and labor) will progressively move out of the taxed or official sector into the untaxed or underground sector. This exodus would continue until, at the margin, the rate of return net of taxes in the official economy becomes identical to the untaxed rate of return in the underground economy. Obviously, this movement of resources is likely to imply a substantial misallocation of resources.

However, the issue of efficiency involves somewhat more complex considerations than that of misallocation. As has been emphasized, in some studies related to the Italian situation, the existence of underground economic activities, often carried out within the house by housewives, give to the economy an efficiency that it would not have otherwise. For example, a woman who has children in school and who would find it impossible to hold a regular job, will be able to allocate to this (underground) domestic work those hours when the children are away and consequently do not need her attention. In addition, to the extent that this woman works in her own house, she needs less investment in structures, and there would be less need for roads because no transportation back and forth from work is required. Furthermore, as this person can fully and directly benefit from the additional output associated with any improvement in her human capital or in her equipment, there would be a greater incentive to carry out these improvements. For developing countries, where excessive regulation of the economy has at times brought about excessive rigidities, the underground economy, which in this case might be more properly called the “parallel” economy, has often made a difference between a relatively viable economy and a stagnating one.

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, 2023, vol. 45, issue 1, 168-182

The underground economy, which includes unlawful activities such as fraud, illegal labour, and crime, has received much attention because of its economic and social growth consequences. This article will analyze the underground economy's components, size, causes, and impacts. The study employs comprehensive econometrics, statistical research, quantitative approaches, and real-world data from numerous countries. This study offers insight into the scale of the underground economy and its impact on society by examining descriptive statistics and doing cross-sectional studies. The underground economy is a vast and complex system encompassing various activities, from tax evasion and benefit fraud to counterfeiting and financial scams. It is estimated that the underground economy accounts for up to 30% of global GDP and can significantly impact economic growth, tax revenue, and public safety. The subsequent chapter examines the components of the underground economy, including fraudulent activities, counterfeit goods, and financial scams. It also discusses the challenges of detecting and preventing underground economic activity and the potential consequences of the underground economy for society. The paper calls for a more comprehensive approach to combating the underground economy, including measures to strengthen law enforcement, improve financial regulations, and educate the public about the risks of underground economic activity. This study investigated the relationship between the size of the population and the size of the underground economy in OECD countries. A quantitative research approach was used, and data were collected from secondary sources. The data were analyzed using SPSS software and EXCEL. The results showed a positive, linear relationship between the population and the underground economy. A stratified sampling method to collect data from OECD countries was used, where the data sources included government reports, tax records, academic research, and international databases. The data was analyzed using a simple linear regression model. The study concluded that there is enough evidence at a 95% confidence interval to suggest that the size of a country's population is directly proportional to the size of its underground economy.

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The Underground Economy: Global Evidence of Its Size and Impact

As a natural extension of its interest in the ways in which the private sector reacts to the activities of government, The Fraser Institute has long studied the underground economy. In pursuing this research, the Institute assembled a roster of experts in Vancouver in April 1994. They included government officials, accountants, economists, lawyers, federal police, politicians, and public policy analysts from Canada, the United States, Britain, Mexico, Chile, Peru, Russia, and Hong Kong. The papers prepared for this meeting, as subsequently revised by the authors, constitute a unique collection of information about the underground economy and how it is manifested in a variety of countries. The purpose of this book is to collect these research findings to make them available to those who are interested in how this fascinating and increasingly prevalent segment of economic activity operates. Section One collects papers that deal particularly with the underground economy in Canada. Section Two outlines a perspective of the UGE which is not often encountered, specifically, the view of law enforcement officials. Section Three contains seven papers that analyze the underground economy in different countries and from different perspectives. Those who have an interest in the underground economy will be impressed by the diversity of experience in the countries discussed-from the United States and Britain to Mexico, Peru, and Chile, through to Russia and China. The fourth and final section of the book consists of two papers by two eminent Canadian economists-Jonathan R. Kesselman and Francois Vaillancourt. The focus, once again, the Canadian economy and some policy implications of the UGE.

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Defining and Estimating Underground and Informal Economies: The New Institional Economics Approach

World Development, Vol 18, No 7, 1990

29 Pages Posted: 14 Jun 2016

Edgar L. Feige

University of Wisconsin - Madison - Department of Economics

Date Written: June 10, 2016

A taxonomy of underground economies is elaborated based on the new institutional approach to economic development. Members of formal sectors confront different sets of transformation and transaction costs than do members of informal sectors and these differences are regarded as crucial to the development process. The paper distinguishes illegal, unreported, unrecorded and informal economies and examines the conceptual and empirical linkages among them. Alternative micro and macro methodologies for measuring underground activities are reviewed and evaluated including census and survey procedures, discrepancies and monetary methods.

Keywords: Underground, unrecorded, unreported, informal, illegal, unobserved, hidden, shadow economy, transaction costs, monetary methods

JEL Classification: O17, H26, H2, K42, D72, H3

Suggested Citation: Suggested Citation

Edgar L. Feige (Contact Author)

University of wisconsin - madison - department of economics ( email ).

1180 Observatory Drive Madison, WI 53706 United States

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The Meaning of the “Underground Economy” and the Full Compliance Deficit

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Part of the book series: Studies in Contemporary Economics ((CONTEMPORARY,volume 15))

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A growing amount of professional attention is now directed toward the issue of the existence and implications of the “underground” or “shadow” economy. Unfortunately, the terms “underground” and “shadow” have been used to mean quite different things by different investigators, and these unresolved questions of definition introduce considerable confusion in the literature. Theoretical and empirical research require a finer set of conceptual distinctions to clarify both the differences and the interconnections among the variety of descriptive terms presently employed by “underground economists.” To this end, I wish to put forward a taxonomic framework which distinguishes among economic, fiscal , and social concepts of income. The first section of this paper elaborates these income concepts and establishes their interrelationships.

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Are Economists Responsible for Income Inequality?

Laffer Effect

Bradford, David (1939–2005)

The author gratefully acknowledges research support from the ALFRED P. SLOAN Foundation.

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An example would be food grown and consumed on a farm which is excluded from fiscal income under U.S. tax law, but is considered to be a segment of total economic income for which NIPA imputations are undertaken.

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Personal Income represents one of the major components in the construction of the broader measure of economic activity, namely GNP. We focus our discussion on personal income, because it is to date, the only NIPA concept for which it is possible to derive a direct empirical relationship to empirical measures of fiscal income, eg. AGI.

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Feige, E.L. (1985). The Meaning of the “Underground Economy” and the Full Compliance Deficit. In: Gaertner, W., Wenig, A. (eds) The Economics of the Shadow Economy. Studies in Contemporary Economics, vol 15. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-88408-5_2

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The underground economy and carbon dioxide (co 2 ) emissions in china.

1. Introduction

2. literature review, 2.1. ekc hypothesis, 2.2. the underground economy and its environmental impacts, 3. theoretical framework, 3.1. ekc model, 3.2. stirpat model, 4. methodology and data (variables), 4.1. measuring the underground economy scale, 4.2. the random coefficients model, 4.3. the threshold regression, 4.4. measuring co 2 emissions from energy consumption, 4.5. variables and data resource, 5.1. the ekc estimation, 5.2. driving forces and the underground economic impacts, 5.3. robustness check, 6. discussion, 6.1. income-carbon dioxides nexus, 6.2. underground economy’s impacts on co 2 emissions, 6.3. structural and technological effects, 7. conclusions, acknowledgments, conflicts of interest.

	lnGDPT	(lnGDPT)	(lnGDPT)		lnGDPT	(lnGDPT)	(lnGDPT)
Beijing	−9.211 **	1.282 *	−0.059	Henan	−1.066	0.388	−0.037
	(−2.27)	(1.87)	(−1.54)		(−0.19)	(0.34)	(−0.47)
Tianjin	−0.127	0.138	−0.012	Hubei	−7.089	1.510	−0.100
	(−0.04)	(0.24)	(−0.38)		(−1.39)	(1.47)	(−1.45)
Hebei	−16.347 **	3.232 **	−0.206 **	Hunan	−0.761	0.151	−0.006
	(−2.41)	(2.43)	(−2.36)		(−0.14)	(0.14)	(−0.08)
Shanxi	−2.352	0.552	−0.041	Guangdong	−8.852 **	1.647 **	−0.099 **
	(−0.41)	(0.47)	(−0.53)		(−1.96)	(2.14)	(−2.27)
Inner Mongolia	−9.219 **	1.836 **	−0.110 **	Guangxi	3.374	−0.591	0.037
	(−2.12)	(2.17)	(−2.04)		(0.68)	(−0.58)	(0.54)
Liaoning	−40.051 ***	7.308 ***	−0.442 ***	Hainan	−13.229 **	2.440 *	−0.141 *
	(−7.48)	(7.74)	(−7.94)		(−1.95)	(1.87)	(−1.69)
Jilin	−14.965 ***	2.894 ***	−0.183 ***	Chongqing	−20.888 ***	3.913 ***	−0.239 ***
	(−2.59)	(2.62)	(−2.62)		(−3.16)	(3.12)	(−2.99)
Heilongjiang	−6.408	1.219	−0.071	Sichuan	−1.644	0.385	−0.030
	(−0.84)	(0.85)	(−0.79)		(−0.31)	(0.36)	(−0.41)
Shanghai	−0.920	0.157	−0.008	Guizhou	−6.496	1.605 *	−0.115 *
	(−0.39)	(0.44)	(−0.42)		(−1.52)	(1.73)	(−1.78)
Jiangsu	−8.606 *	1.460 *	−0.076 *	Yunnan	−7.414	1.779	−0.133
	(−1.94)	(1.88)	(−1.68)		(−1.21)	(1.45)	(−1.64)
Zhejiang	−13.700 ***	2.454 ***	−0.141 ***	Shaanxi	−16.758 ***	3.414 ***	−0.230 ***
	(−3.60)	(3.81)	(−3.89)		(−4.68)	(4.61)	(−4.54)
Anhui	−10.857 **	2.231 **	−0.148 **	Gansu	11.129 ***	−2.469 ***	0.185 ***
	(−2.44)	(2.45)	(−2.45)		(3.38)	(−3.34)	(3.40)
Fujian	−14.921 **	2.670 **	−0.154 **	Qinghai	−20.965 ***	4.178 ***	−0.267 ***
	(−2.48)	(2.49)	(−2.42)		(−3.85)	(3.76)	(−3.58)
Jiangxi	5.052	−1.151 *	0.085 *	Ningxia	−2.108	0.711	−0.060
	(1.56)	(−1.66)	(1.73)		(−0.35)	(0.59)	(−0.74)
Shandong	−11.244 **	2.187 ***	−0.138 ***	Xinjiang	−36.255 ***	7.051 ***	−0.449 ***
	(−2.39)	(2.62)	(−2.75)		(−5.01)	(4.98)	(−4.85)

	lnGDPT	(lnGDPT)	(lnGDPT)		lnGDPT	(lnGDPT)	(lnGDPT)
Beijing	−21.546 ***	3.648 ***	−0.203 ***	Henan	−12.340 ***	2.821 ***	−0.199 ***
	(−3.73)	(3.85)	(−3.92)		(−2.71)	(3.02)	(−3.12)
Tianjin	−9.420 **	1.725 **	−0.099 ***	Hubei	−22.595 ***	4.496 ***	−0.286 ***
	(−1.99)	(2.33)	(−2.57)		(−4.52)	(4.54)	(−4.37)
Hebei	−22.232 ***	4.483 ***	−0.290 ***	Hunan	−9.703 **	2.000 **	−0.125 **
	(−4.35)	(4.42)	(−4.33)		(−2.47)	(2.50)	(−2.31)
Shanxi	−10.704 **	2.234 **	−0.147 **	Guangdong	−18.273 ***	3.251 ***	−0.185 ***
	(−2.38)	(2.49)	(−2.46)		(−3.02)	(3.18)	(−3.21)
Inner Mongolia	−12.738 ***	2.517 ***	−0.152 ***	Guangxi	−9.817 **	2.107 **	−0.136 **
	(−4.45)	(4.55)	(−4.28)		(−2.33)	(2.42)	(−2.28)
Liaoning	−21.762 ***	4.009 ***	−0.241 ***	Hainan	−8.142	1.630	−0.098
	(−3.77)	(3.99)	(−4.11)		(−1.27)	(1.34)	(−1.28)
Jilin	−23.774 ***	4.638 ***	−0.292 ***	Chongqing	−21.708 ***	4.213 ***	−0.262 ***
	(−3.80)	(3.90)	(−3.87)		(−4.22)	(4.41)	(−4.43)
Heilongjiang	−17.118 ***	3.336 ***	−0.207 ***	Sichuan	−9.628 **	2.164 **	−0.148 **
	(−2.73)	(2.93)	(−2.98)		(−2.01)	(2.23)	(−2.27)
Shanghai	−6.193	0.936	−0.046	Guizhou	−8.481 ***	2.116 ***	−0.157 ***
	(−1.55)	(1.55)	(−1.51)		(−2.66)	(3.02)	(−3.13)
Jiangsu	−7.806	1.350	−0.071	Yunnan	−17.281***	3.598 ***	−0.240 ***
	(−1.58)	(1.57)	(−1.43)		(−3.49)	(3.63)	(−3.58)
Zhejiang	−22.920 ***	4.001 ***	−0.226 ***	Shaanxi	−26.105 ***	5.143 ***	−0.323 ***
	(−4.32)	(4.49)	(−4.55)		(−5.44)	(5.32)	(−4.99)
Anhui	−22.480 ***	4.618 ***	−0.306 ***	Gansu	−5.924 *	1.403 *	−0.097 *
	(−8.91)	(9.13)	(−9.01)		(−1.8)	(1.95)	(−1.85)
Fujian	−33.054 ***	5.914 ***	−0.342 ***	Qinghai	−31.678 ***	6.416 ***	−0.419 ***
	(−5.25)	(5.38)	(−5.31)		(−7.05)	(7.14)	(−7.02)
Jiangxi	−3.271	0.783	−0.053	Ningxia	−10.398 *	2.404 **	−0.168 **
	(−0.85)	(0.97)	(−0.96)		(−1.93)	(2.23)	(−2.34)
Shandong	−14.839 ***	2.863	−0.170	Xinjiang	−26.038 ***	4.764 ***	−0.280 ***
	(−3.07)	(3.35)	(−3.38)		(−4.14)	(3.96)	(−3.62)

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Click here to enlarge figure

Energy Type	Raw Coal	Coke	Fuel Oil	Diesel	Kerosene	Gasoline	Electricity
Emission factor	0.7559	0.8550	0.6185	0.5921	0.5714	0.5538	0.2720
Conversion coefficient (tce/t)	0.7143	0.9714	1.4286	1.4571	1.4714	1.4714	-

Variable	Definition (unit)	Mean	Std. Dev.	Min	Max
lnGDPT	Total (underground + formal) per capita GDP (100 yuan)	5.435	0.845	3.354	7.596
lnGDPN	Underground per capita GDP (100 yuan)	4.188	0.981	1.286	6.762
fdi	Ratio of FDI to GDP (%)	2.765	2.698	0.001	21.188
str	Proportion of secondary industry (%)	45.325	7.853	19.262	59.045
lnPOP	Total Population (10 thousand)	8.143	0.763	6.221	9.306
urb	Proportion of urban population (%)	47.414	15.621	21.890	89.600
lnEI	Energy intensity (tons of coal equivalent/billion yuan)	9.639	0.506	8.669	10.928
lnCO	Carbon dioxides emissions (10,000 tons)	10.155	0.894	6.904	12.030

Dependent Variable: lnCO	Cubic Model	Quadratic Model	Linear Model
lnGDPT	−9.430 ***	0.249	0.329 ***
	(−2.92)	(0.76)	(4.68)
(lnGDPT)	1.819 ***	0.008
	(2.90)	(0.24)
(lnGDPT)	−0.113 ***
	(−2.77)
fdi	−0.016 *	−0.01	−0.008
	(−1.74)	(−0.78)	(−0.60)
str	0.014 ***	0.018 ***	0.016 ***
	(3.43)	(4.26)	(3.69)
lnPOP	0.631	0.410	0.386
	(0.82)	(0.42)	(0.45)
urb	0.040 ***	0.037 ***	0.037 ***
	(3.91)	(3.65)	(4.27)
lnEI	0.379 ***	0.431 ***	0.466 ***
	(3.02)	(3.46)	(4.39)
Test of parameter constancy (χ )	17,749.03 ***	15,448.34 ***	14,487.28 ***
Observations	570	570	570

.	Economic Structure (str) As the Regime Dependent Variable	Technology (lnEI) as the Regime Dependent Variable
Test for single threshold
F	46.73	66.86
P-value	0.038	0.006
(10%, 5%, 1% critical values)	36.9721, 44.2496, 61.4470	34.212, 40.132, 65.269
Test for double threshold
F	36.79	45.70
P-value	0.048	0.018
(10%, 5%, 1% critical values)	32.426, 36.044, 49.296	29.862, 37.052, 52.730
Test for triple-threshold
F	28.56	41.19
P-value	0.608	0.656
(10%, 5%, 1% critical values)	63.668, 73.516, 92.938	93.692, 105.639, 148.572
Threshold estimates (γ , γ )	4.782, 5.635	4.796, 5.633

	Economic Structure (str) as the Regime Dependent Variable				Technology (lnEI) as the Regime Dependent Variable
lnGDPN	0.168 ***	lnPOP	1.302 ***	lnGDPN	0.159 ***	lnPOP	1.249 ***
	(8.47)		(11.36)		(8.16)		(11.13)
fdi	–0.016 ***	urb	0.036 ***	fdi	−0.017 ***	urb	0.034 ***
	(−3.88)		(14.45)		(−4.07)		(14.11)
lnEI	0.350 ***	str (β )	0.006 ***	str	0.010 ***	lnEI (β )	0.323 ***
	(7.56)		(2.62)		(5.46)		(7.15)
		str (β )	0.010 ***			lnEI (β )	0.343 ***
Observations	570		(5.23)	Observations	570		(7.59)
R	0.917	str (β )	0.013 ***	R	0.921	lnEI (β )	0.363 ***
Adjusted-R	0.911		(7.29)	Adjusted-R	0.915		(7.99)
aic	−587.6			aic	−612.5
bic	−548.5			bic	−573.4

Variables	M1	M2	M3	M4
lnGDPT	−15.737 ***	−9.912 ***	−16.970 ***	−16.266 ***
	(−5.94)	(−3.06)	(−6.09)	(−6.05)
(lnGDPT)	3.071 ***	1.953 ***	3.324 ***	3.186 ***
	(6.28)	(3.16)	(6.25)	(6.42)
(lnGDPT)	−0.191 ***	−0.120 ***	−0.212 ***	−0.199 ***
	(−6.20)	(−3.00)	(−6.13)	(−6.32)
lnPOP	1.722 *	1.811	0.818	1.908 *
	(1.90)	(1.52)	(0.92)	(1.89)
lnEI	0.430 ***	0.308 **	0.480 ***	0.420 ***
	(3.96)	(2.38)	(5.32)	(4.23)
fdi	−0.008
	(−0.70)
str		0.013 ***
		(3.07)
urb			0.039 ***
			(4.33)

Variables	Economic Structure (str) as the Regime Dependent Variable			Technology (lnEI) as the Regime Dependent Variable
Variables	M1	M2	M3	M4	M5	M6	M7
lnGDPN	0.347 ***	0.321 ***	0.175 ***	0.329 ***	0.320 ***	0.179 ***	0.308 ***
	(18.02)	(16.23)	(8.80)	(16.80)	(16.57)	(9.03)	(15.58)
lnPOP	1.518 ***	1.295 ***	1.379 ***	1.290 ***	1.068 ***	1.269 ***	1.432 ***
	(11.75)	(9.57)	(12.57)	(10.37)	(8.16)	(11.96)	(11.44)
lnEI	0.161 ***	0.103 **	0.385 ***
	(3.06)	(2.03)	(8.12)
fdi		−0.024***			−0.023 ***
		(−4.83)			(−4.70)
urb			0.040 ***			0.036 ***
			(16.61)			(14.52)
str							0.011 ***
							(5.36)
Thresholds (γ γ )	4.954	4.796	5.308	4.796	4.796	4.782	4.769
Thresholds (γ γ )	5.670	5.633	6.048	5.566	5.566	5.651	5.635
str (β )	0.005 **	0.004	0.011 ***
str (β )	0.011 ***	0.011 ***	0.014 ***
str (β )	0.016 ***	0.016 ***	0.017 ***
lnEI (β )				0.176 ***	0.161 ***	0.439 ***	0.098 **
lnEI (β )				0.208 ***	0.196 ***	0.461 ***	0.126 **
lnEI (β )				0.244 ***	0.232 ***	0.484 ***	0.160 ***
Observations	570	570	570	570	570	570	570
R	0.879	0.884	0.914	0.882	0.887	0.915	0.887

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Zhou, Z. The Underground Economy and Carbon Dioxide (CO 2 ) Emissions in China. Sustainability 2019 , 11 , 2802. https://doi.org/10.3390/su11102802

Zhou Z. The Underground Economy and Carbon Dioxide (CO 2 ) Emissions in China. Sustainability . 2019; 11(10):2802. https://doi.org/10.3390/su11102802

Zhou, Zhimin. 2019. "The Underground Economy and Carbon Dioxide (CO 2 ) Emissions in China" Sustainability 11, no. 10: 2802. https://doi.org/10.3390/su11102802

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Corpus ID: 110714208

Underground economy: definition and causes

S. Jie , H. H. Tat , +1 author Lee Thean Chye
Published 2011

16 Citations

Combining qualitative and quantitative approaches for measuring underground economy of pakistan, the shadow economy is retreating: an example of georgia, the theoretical development of opacity entrepreneurship in malaysia, grounded theory methodology for theory generation in opacity entrepreneurship research, evaluation of the impact of shadow economy determinants: ukrainian case, the effective factors on informal economy in developing countries (panel data model), analysis of institutional quality influence on shadow economy development, the non‐observed economy in portugal: the monetary model and the mimic model, dependence of informal employment on population income in russian regions: lessons from the pandemic, estimating the size of the shadow economy in nine mena countries during the period 2000 to 2017 using the mimic model, 27 references, economy, anti-economy, underground economy: conceptual and terminological problems, informal and underground economy, the underground economy: guidance for policy makers, causes and consequences of non - observed economy.

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The Shadow Economy: An International Survey

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What Is the Underground Economy?

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Underground Economy: Definition, Statistics, Trends, and Examples

The underground economy refers to economic transactions that are deemed illegal, either because the goods or services traded are unlawful in nature, or because transactions fail to comply with governmental reporting requirements. The underground economy is called the shadow economy, the black market , or the informal economy.

Key Takeaways

While estimates vary, some put the underground economy at 11% to 12% of U.S. gross domestic product (GDP), or roughly $2.25 trillion to $2.5 trillion.
Elements of the underground economy vary from nation to nation, state to state, and in some cases, municipality to municipality.
Alternative names for the underground economy include the shadow economy, the black market, and the informal economy.
Dealing in illegal drugs, human trafficking, endangered species, human organs, antiquities, and stolen goods are examples of activities in the underground economy.

Understanding the Underground Economy

It is difficult to accurately gauge the size of underground economies because, by nature, they're not subject to governmental oversight; therefore, the economic activity does not generate tax returns or appear in official statistical reports; however, tracking outgoing expenditures, even though the transactions are cloaked, can give a sense of statistics. In other words, the money spent—that's not accounted for in recorded transactions—theoretically represents the breadth of black market activity.

The American underground economy was estimated to have reached $1 trillion in 2009, representing approximately 8% of U.S. gross domestic product (GDP); however, by 2013, largely due to the long-term effects of the 2008 financial crisis and the resulting contraction of the formal economy, underground economic expenditures reached an estimated $2 trillion. Estimates vary, but studies show that the U.S. underground economy is 11% to 12% of GDP, making the underground economy approximately $2.5 trillion in 2021.

Compared to most other nations, America's underground economy has stayed relatively flat, according to findings published by a 2018 International Monetary Fund study, which explored the shadow economic activity of 158 countries between 1991 to 2015. Some of the chief takeaways of the report are as follows:

The mean value of the size of the shadow economy across all nations was 31.9%.
The nations with the three largest shadow economies were Zimbabwe (60.6%), Bolivia (62.3%), and Georgia (64.9%).
The three smallest shadow economies were Austria (8.9%), the United States (8.3%), and Switzerland (7.2%).

Depending on the context, the impact of underground economies can range from harmful to helpful. For example, in developing countries with large shadow economies, the uncollected tax revenue can slow economic growth and hamper the creation of public programs; however, in other cases, participants in underground economies who retain income that would usually go to taxes can boost overall economic activity and stimulate demand.

This situation holds especially true in nations where the withheld tax revenues would have been siphoned off by corrupt government officials.

What Is Considered "Underground"?

The list of activities deemed to be underground economic transactions varies, depending on the laws of a given jurisdiction. For example, in some countries, alcohol is banned, while other nations encourage legal brewery, distillery, and distribution operations. Similarly, while drugs are illegal in most countries, some nations, plus an increasing number of U.S. states, have legalized the sale and use of cannabis .

In the early 1900s, Mexican immigrants introduced recreational marijuana use to the United States. During the Great Depression, high unemployment rates triggered fears of marijuana consumption, which (coupled with racist sentiments at the time) led to research that linked marijuana to violent crime.

Consequently, by 1931, 29 U.S. states outlawed the drug. Nonetheless, many people deemed the plant to be harmless and continued buying and selling it illegally. Subsequent studies refuted the idea that marijuana was linked to crime while declaring that the drug was neither addictive nor a gateway to other drugs. Instead, proponents argue, marijuana has proven to be therapeutically helpful in treating illnesses such as cancer and AIDS.

As of 2022, 37 states and the District of Columbia have legalized the plant for medical use, which is now abundantly present in some food products, as well as many topical and oral medications. As of 2022, 18 states and D.C. allow for non-medical regulated cannabis.

The IRS considers money earned from babysitting as taxable self-employment income and, when the amount is greater than $400 for the year (as of 2022), must be reported when the individual files their tax return.

Meanwhile, an estimated 53.2% of cigarette sales in New York state in 2018 (latest figures) were facilitated through underground economic transactions. Although tobacco is legal in New York City, the product carries an exorbitant sin tax , and so many sales go unreported or "under-the-table."

All such under-the-table transactions, in which participants fail to report their income to the IRS or the state, are technically considered to be underground economic activities. This status can even apply to babysitters who don't report the cash that they pocket after watching a neighbor's child down the street.

Other primary examples of underground economic activity include the untaxed sale of physical goods and the smuggling of goods into a country to avoid paying duties at the border. Human trafficking operations also comprise the underground economy, as do the markets for copyrighted materials, endangered animal species, antiquities, and illegally-harvested human organs.

Which Country Has the Largest Underground Economy?

Zimbabwe has the largest underground economy with approximately 60.6% of its economy made up of underground activities. Switzerland has the smallest underground economy, making up 7.2% of its economy.

What Are the Characteristics of an Underground Economy?

Underground economies do not just include illegal activities, such as the purchase and sale of banned drugs or the illegal sale of weapons. It also includes any unreported income, such as paying restaurant employees under the table or jobs such as babysitting that go unreported. Similarly, any bartering that does not involve the exchange of cash and is not reported is considered part of the underground economy.

Why Do People Engage in the Underground Economy?

There are a variety of reasons why people engage in the underground economy. These reasons can be as simple as obtaining items that they can not legally buy, such as outlawed drugs and weapons. It can also be to avoid taxes, labor laws, and administrative paperwork.

Dickinson. " Understanding the Shadow Economy ."

CNBC. " $2 Trillion Underground Economy May Be Recovery's Savior ."

The Christian Science Monitor. " America's 'Shadow' Economy Is Bigger Than You Think - and Growing ."

International Monetary Fund. " Shadow Economies Around the World. What Did We Learn Over the Last 20 Years? " Download. Page 2.

PBS. " Frontline. Marijuana Timeline ."

University of Georgia. " Survey of Marijuana Law in the United States: History of Marijuana Regulation in the United States ."

National Conference of State Legislatures. " State Medical Cannabis Laws ."

Turbotax. " Do Babysitters Have to Report Their Income on Taxes? "

Tax Foundation. " Cigarette Taxes and Cigarette Smuggling by State, 2018 ."

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COMMENTS

(PDF) The underground economy: an exploration of components, size
Abstract. The underground economy, which includes unlawful activities such as fraud, illegal. labour, and crime, has received much attention because of its economic and social growth. consequences ...
Size, Causes and Consequences of the Underground Economy: An
The paper calls for a more comprehensive approach to combating the underground economy, including measures to strengthen law enforcement, improve financial regulations, and educate the public ...
The underground economy: Causes and consequences of this global ...
This paper highlights the sources of payments problems in less developed countries. Growth in the industrial countries has a direct impact on the current account of the developing countries through its influence on both the prices and volumes of their exports. An increase in the real effective exchange rate is clearly a fundamental determinant of a deteriorating current account since, other ...
The underground economy: an exploration of components ...
It is estimated that the underground economy accounts for up to 30% of global GDP and can significantly impact economic growth, tax revenue, and public safety. The subsequent chapter examines the components of the underground economy, including fraudulent activities, counterfeit goods, and financial scams. It also discusses the challenges of ...
PDF Underground Economy: Global Evidence of Its Size and Impact
has long studied the underground economy. In pursuing this research, the Institute assembled a roster of experts in Vancouver in April 1994. They included government officials, accountants, economists, lawyers, ... Section Three contains seven papers that analyze the underground economy in different countries and from different perspectives. Those
The Underground Economy: Global Evidence of Its Size and Impact
The Underground Economy: Global Evidence of Its Size and Impact. As a natural extension of its interest in the ways in which the private sector reacts to the activities of government, The Fraser Institute has long studied the underground economy. In pursuing this research, the Institute assembled a roster of experts in Vancouver in April 1994 ...
The underground economy : global evidence of its size and impact
A Critical Review of the Empirical Research on Canadian Tax Compliance. B. Erard. Economics, Law. 1997. This paper reviews the evidence on tax non-compliance and the "underground economy" in Canada, with an emphasis on the reporting activities of self-employed individuals and businesses. Indirect….
Inclusive Growth, Institutions, and the Underground Economy
economy. This paper analyzes the determinants of the underground economy, with particular emphasis on the role of institutions and the rule of law. We find that when businesses are faced with onerous regulation, inconsistent enforcement and corruption, they have an incentive to hide their activities in the underground economy.
Size, Causes and Consequences of the Underground Economy: An ...
The welfare effects of an underground economy are varied and nuanced, and a general assessment is probably not possible. But this is no reason to insist that all underground activity is welfare-reducing. I suspect the theme of tax evasion pervading the book is a clue to why this perspective is strongly represented.
An Analysis of the Underground Economy and its Macroeconomic ...
Aggregate investment in the economy is lowered because of credit rationing. Taxes that are too low eliminate the underground economy, but result in unsustainable budget and trade deficits. Thus, the optimal rate of taxation, from a macroeconomic point of view, may lead to some underground activity. Working Paper No. 2003/023.
Does the economic freedom hinder the underground economy ...
Our paper contributes to the huge literature investigating the determinants of the shadow economy. It is well known that its size increases with the tax rate and decreases with the efficiency of the tax enforcement system (Hassan and Schneider, 2016).Moreover, there is evidence that a more intensive regulation discourages entrepreneurship entry and, in turn, makes the shadow economy increase ...
Defining and Estimating Underground and Informal Economies: The New
The paper distinguishes illegal, unreported, unrecorded and informal economies and examines the conceptual and empirical linkages among them. Alternative micro and macro methodologies for measuring underground activities are reviewed and evaluated including census and survey procedures, discrepancies and monetary methods.
1432 PDFs
The underground economy is a prevalent characteristic of nations all over the globe. This paper explores to which degree corruption, governance and quality of institutions influence the ...
The Meaning of the "Underground Economy" and the Full ...
A growing amount of professional attention is now directed toward the issue of the existence and implications of the "underground" or "shadow" economy. ... Theoretical and empirical research require a finer set of conceptual distinctions to clarify both the differences and the interconnections among the variety of descriptive terms ...
The Underground Economy and Carbon Dioxide (CO
The remainder of the paper is organized as follows: Section 2 reviews past research on EKC and the underground economy. Section 3 introduces the theoretical foundation for this study. Section 4 describes the details of the variable, source of the data, empirical methodology and statistical inference strategies used in the paper.
PDF Causes and consequences of underground economy
Causes and consequences of underground economy Mara, Eugenia-Ramona Babes Bolyai University of Cluj-Napoca, Faculty of Economics and ... 2011 Online at https://mpra.ub.uni-muenchen.de/36438/ MPRA Paper No. 36438, posted 06 Feb 2012 16:22 UTC. 1109 CAUSES AND CONSEQUENCES OF UNDERGROUND ECONOMY MARA EUGENIA RAMONA1 ―BABEŞ-BOLYAI‖ UNIVERSITY ...
Underground economy: definition and causes
There are increased numbers of research articles postulating or discussing the similar terminology for the concept of "Underground Economy". Such attempt has shown that this elusive social economy is worth to study empirically. Despite its numerous research studies, there is presently no single or universally agreed definition for "underground economy". Different camps of scholars and ...
The Growth of the Underground Economy
For the OECD countries, the growth in shadow economies has been fastest in the 1990s: in the group as a whole, the shadow economy rose from 13 percent in 1990-93 to 17 percent in 1999-2000. Late in the decade, the shadow economy was still growing in most OECD countries. Shadow Labor Force.
Underground Economy's Measurement Methods
The paper also describes five indirect indicators which are used for the underground economy estimation, and presents the advantages as well as the limits of the methods. Soft modeling scheme ...
Underground economy Research Papers
Abstract. This study contributes to the debate over assessing the size of the underground economy, by proposing a reinterpretation of the Currency Demand Approach (CDA) that overcomes some restrictive assumptions characterising the pioneering contribution by Tanzi (1980, 1983) and the ensuing studies which have adopted this methodology.
Underground Economy: Definition, Statistics, Trends, and Examples
The American underground economy was estimated to have reached $1 trillion in 2009, representing approximately 8% of U.S. gross domestic product (GDP); however, by 2013, largely due to the long ...
The underground economy: What is the influence of the ...
Abstract. Underground economy is a continuous concern of economists all over the world and finding determinants and factors acting on its size is crucial in the fight to control and stop this ...
Unlocking Pakistan's digital potential: A roadmap for workforce
This paper explores the various aspects of workforce digitalization in Pakistan. Through an exploratory case study, it examines key trends of workforce digitalization, and the multifaceted impact of digitalization on the workforce in Pakistan, highlighting the opportunities, challenges, and economic benefits.

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Underground economy: definition and causes

16 Citations

The Shadow Economy: An International Survey

Underground economy

What Is the Underground Economy?

Global Underground Economies

Underground Economy: Definition, Statistics, Trends, and Examples

Key Takeaways

Understanding the Underground Economy

What Is Considered "Underground"?

Which Country Has the Largest Underground Economy?

What Are the Characteristics of an Underground Economy?

Why Do People Engage in the Underground Economy?

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VIDEO

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