• Icon to change language to english
  • Icon to change language to english

Why does the size of the shadow economy vary across nations

Authors

Keywords
shadow economy, income concealment, institutional effectiveness, tax burden, the vicious cycle

Summary
This study examines the shadow economy as a macroeconomic and institutional phenomenon that varies across countries. The main objective is to explain these differences by analyzing factors such as tax burden, institutional quality, regulatory environment, and labor market conditions. The study highlights the lack of a unified definition, with the shadow economy most commonly understood as legal activities deliberately concealed from public authorities. The analysis shows that it leads to an underestimation of real GDP and is measured through direct, indirect, and mixed methods. It is found that its share is lower in developed countries, while in less developed economies it often plays a compensatory role. In conclusion, the size of the shadow economy is determined by the interaction between economic incentives and institutional factors.

JEL: E26, O17, F63
Pages: 14
DOI:  https://doi.org/10.58861/tae.grdier.2026.05

More titles

  • Challenges in managing international teams in a remote work environment

    This study examines the challenges of managing international teams in a remote work environment by combining theoretical analysis with a practical case study. The research explores key aspects such as the nature of remote work, the impact of cultural differences, and the importance of effective communication, drawing on established frameworks such ...

  • The interplay between trade integration and air transport in Africa

    This study examines the interaction between the African Continental Free Trade Area (AfCFTA) and the Single African Air Transport Market (SAATM) in the context of economic integration in Africa. The objective is to systematize and synthesize existing literature and to develop an integrated conceptual framework for analyzing their combined economic ...

  • Challenges to international diversification: analysis through the global synchronized loss index

    This article examines the problem of the decreasing efficiency of international investing during financial crises. Traditionally, it is believed that if you invest in different countries, you reduce risk. However, new research shows that when there is great market stress, all markets start to fall simultaneously. This scientific article examines ...