Bibliographic Information

The shadow economy

Friedrich Schneider & Colin C. Williams

(Hobart paper, 172)

Institute of Economic Affairs, 2013

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Includes bibliographical references

Description and Table of Contents

Description

Measurement of the shadow economy is notoriously difficult as it requires estimation of economic activity that is deliberately hidden from official transactions. Surveys typically understate the size of the shadow economy but econometric techniques can now be used to obtain a much better understanding of its size. The shadow economy constitutes approximately 10 per cent of GDP in the UK; about 14 per cent in Nordic countries and about 20 - 30 per cent in many southern European countries. The main drivers of the shadow economy are (in order): tax and social security burdens, tax morale, the quality of state institutions and labour market regulation. A reduction in the tax burden is therefore likely to lead to a reduction in the size of the shadow economy. Indeed, a virtuous circle can be created of lower tax rates, less shadow work, higher tax morale, a higher tax take and the opportunity for lower rates. Of course, a vicious circle in the other direction can also be created.

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Details

  • NCID
    BB1704891X
  • ISBN
    • 9780255366748
  • Country Code
    uk
  • Title Language Code
    eng
  • Text Language Code
    eng
  • Place of Publication
    London
  • Pages/Volumes
    184 p.
  • Size
    20 cm
  • Parent Bibliography ID
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