economy position producing for the market—regardless of whether they also have officially recorded positions. Some workers in the shadow economy take on second jobs after or even during their regular hours in official employment. Others work only in the shadow economy, either because they find it more profitable to do so or because they are barred from the official economy—as is the case for illegal immigrants, for example. In the European Union in the late 1990s, 20 million people engaged in shadow economy activities. In all European OECD countries combined, about 35
following reasons: 1. to avoid payment of income, value added or other taxes, 2. to avoid payment of social security contributions, 3. to avoid having to meet certain legal labor market standards, such as minimum wages, maximum working hours, safety standards, etc., and 4. to avoid complying with certain administrative obligations, such as completing statistical questionnaires or other administrative forms.” Regarding employment, the “shadow labor market includes all cases, where the employees or the employers, or both, occupy a shadow economy position’’ ( Schneider, 2012
economy. 20 Moreover, every shadow economic activity involves the labor market to some extent: Hence, the “shadow labor market” includes all cases where the employees or the employers, or both, occupy a “shadow economy position.” This is true regardless of whether such employees or employers also have official (legal) position, as long as the production is for the market. Why do people work in the shadow economy? In the official labor market, the costs that firms (and individuals) have to pay when “officially” hiring someone are tremendously increased by the burden