Summary
In this chapter the various methods to measure the size and development of the shadow economy are shortly discussed and criticized. Then the results of two methods, the currency demand and model approach are presented and it is shown that for the year 1978 and for 16 of 24 OECD-countries the size of the shadow economy is more than 5% of the GNP. The next step is to analyze the effects of policy change on the shadow economy, like a major decline of the direct tax burden in the year 1989 in Austria with the expectation of a decreasing shadow economy. However, one observes an increasing shadow economy in the years 1989 to 1991 in Austria, because other important factors, why people work in the shadow economy, like regulation, have increased during this time, which offset the lower tax burden.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
Similar content being viewed by others
References
Aigner, DJ., Schneider, F. & Ghosh, D. (1988). Me & my shadow: Estimating the size of the U.S. underground economy from time series data. In W. Barnett et al. (eds.), Economic theory & econometrics (pp. 297–334 ). Cambridge (Mass.): Cambridge University Press.
Barthelemy, Ph. (1982). Travail au noir et economie souterraine: un etat de la recherche. Travail et Emploi, 72, 25–33.
Blades, D. (1982). The hidden economy and the national accounts. OECD ( Occasional Studies ). Paris, 28–44.
Boeschoten, W.C. & Fase, M.M.G. (1984). The volume of payments & the informal economy in the Netherlands 1965–1982. Dotrecht: M. Nijhoff.
Boyle, G.E. (1982). A glimpse at the non-accounted economy: the case of Ireland. Paper presented at the international conference on the unobserved economy. NIAS, Wassenaar, June 3–6.
Cagan, Ph. (1985). The demand for currency relative to the total money supply. Journal of Political Economy, 66, 302–328
Clotefelter, Ch.T. (1983). Tax evasion & tax rates: an analysis of individual return. Review of Economic & Statistics, 65, 63–373.
Contini, B. (1981). Labour market segmentation & the development of the parallels economy — the Italian experience. Oxford Economic Papers, 33, 401–412.
Del Boca, D. (1981). Parallel economy & allocation of time. Micros (Quarterly Journal of Microeconomics), 4, 13–18.
Feige, E.L. (1979); How big is the irregular economy?. Challenge, 22, 5–13.
Feige, E.L. (1982). A new perspective on macroeconomic phenomena: the theory & measurement of the unobserved economy of the United States: causes, consequences, & implications. In M. Walker (ed.), International burden of government (pp. 112–136 ). Vancouver: Porter.
Franz, A. (1985). Estimates of the hidden economy in Austria on the basis of official statistics. The Review of Income and Wealth, 57, 325–336.
Frey, B.S. & Pommerehne, W.W. (1984). The hidden economy: state & prospects for measurement. Review of Income & Wealth, 30, 1–23.
Frey, B.S. & Weck-Hannemann, H. (1984). The hidden economy as an unobserved variable. European Economic Review, 26, 33–53.
Frey, B.S., Weck, H. & Pommerehne, W.W. (1982). Has the shadow economy grown in Germany? An exploratory study. Weltwirtschaftliches Archiv, 118, 499–524.
Gaertner, W. & Wenig, A. (eds.) (1985). The economics of the shadow economy. Heidelberg: Springer-Verlag.
Garcia, G. (1978). The currency ratio & the subterranean economy. Financial Analysts Journal, 69, 64–66.
Geeroms, H. (1983). De ondergrondse economie in Belgie. Tijdschrift voor Economie en Management, 28, 77–91.
Gutman, P.M. (1977). The subterranean economy. Financial Analysts Journal, 34, 24–27.
Hofreither, M.F. & Schneider, F. (1987). Die Erfassung der Schattenwirtschaft durch den Bargeldansatz — plausible Ergebnisse mittels unzulässiger Methode?. Wirtschaftspolitische Blätter, 34, 99–118.
International Revenue Service (1979). Estimates of income unreported of individual income tax returns. Report, September. Washington D.C.: U.S. Government Printing Office.
Isachsen, A.J., Klovland, J. & Strom, S. (1982). The hidden economy in Norway. In V. Tanzi (ed.), The underground economy in the United States and abroad (pp. 209–321 ). Lexington: Heath.
Isachsen, AJ. & Strom, S. (1980). The hidden economy: the labour market & tax evasion. Scandinavian Journal of Economics, 82, 304–311.
Isachsen, AJ. & Strom, S. (1985). The size & growth of the hidden economy in Norway. Review of Income & Wealth, 31, 21–38.
Kirchgässner, G. (1983). Size & development of the West-German shadow economy 1955–1980. Zeitschrift für die gesamte Staatswissenschafu 139, 197– 214.
Kirchgässner, G. (1984). Verfahren zur Erfassung des in der Schatten Wirtschaft erarbeiteten Sozialproduktes. Allgemeines Statistisches Archiv, 68, 378–405.
Klovland, J. (1984). Tax evasion & the demand for currency in Norway & Sweden. Is there a hidden relationship?. Scandinavian Journal of Economics, 86, 423–439.
Lafuente, A. (1980). The unobserved economy in the Federal Republic of Germany. In E.L. Feige (ed.), The unobserved economy (pp. 236–260 ). Cambridge: Cambridge University Press.
Langefeldt, E. (1984). The unobserved economy in the Federal Republic of Germany. In E.L. Feige (ed.), The unobserved economy (pp. 261–279 ). Cambridge: Cambridge University Press.
Lundager, J. & Schneider, F. (1986). The development of the shadow economics for Denmark, Norway and Sweden: a comparison. Nationaloekonomisk Tidskrift, 124, 362–379.
Macafee, K. (1980). A glimpse of the hidden economy in the national accounts. Economic Trends, 316, 81–87.
Matthews, K. (1981). The demand for currency & the rise of black economy 1973– 1979. Liverpool: Research Group Economic Bulletin, 2, 106–134.
Mirus, R. & Smith, R. (1982). Canada’s irregular economy. In V. Tanzi (ed.), The underground economy in the United States and abroad (pp. 273–284 ). Lexington: Heath.
Mogensen, G.V. (1985). Sort arbeide i Danmark,. Kobenhavn: Nyt Nordsk Forlag Arnold Busck.
Mooslechner, P. (1985): Der monetäre Ansatz zur Schattenwirtschaft — Eine empirische Illustration anhand österreichischer Daten. In J. Skolka (ed.), Die andere Wirtschaft: Schwarzarbeit und Do-It-Yourself in Österreich (pp. 101–119 ). Vienna: Segnum Verlag.
O’Neil, D.M. (1983). Growth of the underground economy 1950–81: some evidence from the current population survey. Study for the Joint Economic Committee. Congress of the United States. Joint Committee Print (pp. 98–122 ). Washington: U.S. Gov. Printing Office.
Park, Th. (1979). Reconciliation between personal income & taxable income. 1947–1977. Washington, D.C.: Bureau of Economic Analysis.
Petersen, H.-G. (1982). Size of the public sector, economic growth & the informal economy: development trends in the Federal Republic of Germany. Review of Income & Wealth, 28, 191–215.
Pommerehne, W.W. (1986). Was wissen wir eigentlich über Steuerhinterziehung?. Rivista Internationale di Science Economiche e Commercinti, 35, 230–262.
Pommerehne, W.W. & Schneider, F. (1985). The decline of productivity growth and the rise of the shadow economy in the U.S.. Working Paper. Aarhus, University of Aarhus.
Saba, A. (1980). L industria sommersa e il nuovo modello di sviluppo. Marsillio, Venice & Padova: Gower.
Schneider, F. (1986). Estimating the size of the Danish shadow economy using the currency demand approach: an attempt. Scandinavian Journal of Economics, 88, 634–688.
Schneider, F. (1994). Can the shadow economy be reduced through major tax reforms? An empirical investigation for Austria. Journal of Public Finance, forthcoming (special issue).
Schneider, F., Hofreither, M. & Neck, R. (1989). The consequences of a changing shadow economy for the official economy. Some empirical results for Austria, In D. Bös & H. Felderer (eds.), The political economy of progressive taxation (pp. 181–211 ). Heidelberg: Springer Publishing Company.
Schneider, F. & Neck, R. (1992). The development of the shadow economy under changing tax systems and structures: some theoretical and empirical results for Austria. Paper presented of the ISPE “Tax Administration & Tax Policy” in Madrid ( Spain ). Madrid, 1992.
Simon, C.P. & Witte, A.D. (1982). Beating the system: the underground economy. Auburn: House Boston.
Skolka, J. (1985). Die andere Wirtschaft: Schwarzarbeit und Do-It-Yourself in Österreich. Vienna: Signum Verlag.
Smith, A. (1981). The informal economy. Lloyds Bank Review, 118, 45–61.
Tanzi, V. (1980). The underground economy in the United States: estimates and implications. Banca Nazionale desLavoro, 135, 427–453.
Tanzi, V. (1983). The underground economy in the United States: annual estimates, 1930–1980. IMF-Staff Papers, 30, 238–305.
Thomas, J J. (1992). Informal economic activity. LSE handbooks in economics.
London: Harvester and Wheatsheaf.
Weck, H. (1983). Schattenwirtschaft: eine Möglichkeit zur Einschränkung der öffentlichen Verwaltung?. Bern: Peter Lang.
Weck-Hannemann, H., Pommerehne, W.W. & Frey, B.S. (1984). Schattenwirtschaft. München: Verlag Vahlen.
Weck-Hannemann, H., Pommerehne, W.W. & Frey B.S. (1986). Die heimliche Wirtschaft. Struktur und Entwicklung der Schattenwirtschaft in der Schweiz.. Bern: Paul Haupt Verlag.
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 1994 Springer-Verlag Berlin · Heidelberg
About this paper
Cite this paper
Schneider, F. (1994). Measuring the Size and Development of the Shadow Economy. Can the Causes be Found and the Obstacles be Overcome?. In: Brandstätter, H., Güth, W. (eds) Essays on Economic Psychology. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-48621-0_10
Download citation
DOI: https://doi.org/10.1007/978-3-642-48621-0_10
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-642-48623-4
Online ISBN: 978-3-642-48621-0
eBook Packages: Springer Book Archive