New Estimates for the Shadow Economies all over the World

By Friedrich Schneider, Andreas Buehn, C. E. Montenegro. 2010

857 citations recorded by the source corpus.

This paper presents estimations of the shadow economies for 162 countries, including developing, Eastern European, Central Asian, and high income OECD countries over 1999 to 2006/2007. According to our estimations, the weighted average size of the shadow economy (as a percentage of ‘official’ GDP) in Sub-Saharan Africa is 37.6%, in Europe and Central Asia (mostly transition countries) 36.4% and in high income OECD countries 13.4%. We find that an increased burden of taxation (direct and indirect ones), combined with (labour market) regulations and the quality of public goods and services as well as the state of the ‘official’ economy are the driving forces of the shadow economy.

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/93a1fefedce632b520d4163d0f51f165b9aa7eb4

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Citations in the corpus

Evidence of the invisible: toward a credibility revolution in the empirical analysis of tax evasion and the informal economy (2012, background): “58 Three examples in Schneider et al. (2010) are: 1) an element of B is the labor force participation rate and an element of H is the unemployment rate (these two variables have a direct, mechanical relationship), 2) an element of B is M0/M1 and an element of H is the inflation rate, and 3) an…”
Factors Influencing SME Tax Compliance: Evidence from Indonesia (2019, result): “However, some other studies, such as Slemrod et al. (2001), Braithwaite (2009), and Inasius (2015) obtain contradicting results.”
The export performance of emerging economy firms: The influence of firm capabilities and institutional environments (2018, background): “For instance, the estimated size of informal sectors in Brazil, Russia, India and China is relatively large, at around 39.0%, 43.8%, 22.2% and 12.7% respectively of GDP during the 2000 s (Schneider et al., 2010).”
Out of the shadows: a classification of economies by the size and character of their informal sector (2014, methodology): “The further advantage is that data are available not only for the EU-27 (see Schneider, 2013) but for 162 countries, and this method is commonly used by agencies such as the World Bank to estimate its variable size globally (Schneider et al., 2010).”
Costs and Benefits to Phasing out Paper Currency (2015, background): “In Europe, where taxes are higher and regulation is often more onerous, most estimates suggest that the size of the underground economy is considerably larger than in the United States (see Schneider, Buehn, and Montenegro 2010).”
Innovation and productivity in formal and informal firms in Ghana (2017, positive): “…its intrinsic nature, but it has been estimated that the weighted average size of the shadow economy (as a percentage of GDP in the period 1999-2007) in Sub-Saharan Africa is around 40 per cent (Schneider et al., 2011) and makes up to 80 per cent of non-agricultural employment (Chen et al., 1999).”
Size and Development of the Shadow Economies of 157 Countries Worldwide: Updated and New Measures from 1999 to 2013 (2016, background): “Following them, various scholars like Tafenau et al. (2010); Tedds (2005); Schneider et al. (2010); Dell’Anno (2007); Hassan and Schneider (2016), Buehn and Farzanegan (2012), Farzanegan (2009); Chaudhuri et al.”
Money or ideas ? a field experiment on constraints to entrepreneurship in rural Pakistan (2014, background): “As a result, estimates of the size of the informal economy as a percentage of “official” GDP are smaller, at around 33 percent (Schneider et al. 2010).”
Macro-level determinants of formal entrepreneurship versus informal entrepreneurship (2014, positive): “…the argument that cultural practices have a stronger predictive power on the level of entrepreneurship since they are related to answers by respondents concerning typical behavior in their culture versus personal preferences (House et al., 2004; Schneider et al., 2010b; Stephan and Uhlaner, 2010).”