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Mr. Friedrich Schneider and Dominik Enste

fact of life—and are now increasing around the world—almost all societies try to control their growth, because of the potentially serious consequences: A prospering shadow economy makes official statistics (on unemployment, official labor force, income, consumption) unreliable. Policies and programs that are framed on the basis of unreliable statistics may be inappropriate and self-defeating. The growth of the shadow economy can set off a destructive cycle. Transactions in the shadow economy escape taxation, thus keeping tax revenues lower than they

Mr. Friedrich Schneider and Dominik Enste

Abstract

Examines the role of the shadow, or underground, economy. Looks at ways of measuring it, the relationship between the shadow economy and the main stream economy, why it has been growing in size, and its effects on overall economic growth. How can states limit the size of the shadow economy, and does it matter that it exists?

Mr. Friedrich Schneider and Dominik Enste

Abstract

Examines the role of the shadow, or underground, economy. Looks at ways of measuring it, the relationship between the shadow economy and the main stream economy, why it has been growing in size, and its effects on overall economic growth. How can states limit the size of the shadow economy, and does it matter that it exists?

Mr. Friedrich Schneider and Dominik Enste

Abstract

Examina el papel de la economía sumergida, o economía subterránea. Analiza la forma de medirla, la relación entre la economía sumergida y la economía formal, las razones por las cuales está creciendo en tamaño, y sus efectos en el crecimiento económico general. ¿Cómo pueden los Estados medir la economía sumergida, y es importante su existencia?

Mr. Friedrich Schneider and Dominik Enste

Abstract

Examines the role of the shadow, or underground, economy. Looks at ways of measuring it, the relationship between the shadow economy and the main stream economy, why it has been growing in size, and its effects on overall economic growth. How can states limit the size of the shadow economy, and does it matter that it exists?

Mr. Friedrich Schneider and Dominik Enste

Abstract

Ce document examine le rôle de l'économie de l'ombre, ou économie souterraine. Elle aborde les moyens d'en mesurer l'ampleur, les liens entre l'économie souterraine et l'économie officielle, les raisons de sa croissance, et ses effets sur la croissance économique globale. Comment les États peuvent-ils limiter la taille de l'économie souterraine, et son existence pose-t-elle problème ?

Mr. Friedrich Schneider and Dominik Enste

Abstract

Examines the role of the shadow, or underground, economy. Looks at ways of measuring it, the relationship between the shadow economy and the main stream economy, why it has been growing in size, and its effects on overall economic growth. How can states limit the size of the shadow economy, and does it matter that it exists?

Mr. Friedrich Schneider and Dominik Enste
This paper presents estimates of the size of the shadow economy in 76 developing, transition, and OECD countries, which are derived by combining figures from different estimation methods. We describe and discuss the strengths and weaknesses of the different estimation methods. We find that the growth of the shadow economy—which is now remarkably large in the 76 countries—is strongly related to increasing burdens of taxation and social security contributions, as well as to the extent of state regulatory activities. Rising corruption also has a clearly positive impact on the growth of the shadow economy.
Mr. Friedrich Schneider and Dominik Enste

inaccurate in magnitude. In such a situation, a prospering shadow economy may cause politicians severe difficulties because it provides unreliable official indicators, and the direction of intended policy measures may therefore be questionable. On the one hand, a growing shadow economy may provide strong incentives to attract (domestic and foreign) workers away from the official economy. On the other hand, at least two-thirds of the income earned in the shadow economy is immediately spent in the official economy 5 resulting in a considerable (positive) stimulating effect