A Closer Look

Is there a link between the size of the shadow economy and the Euro crisis ?

Just look at this figure to convince yourself.

Source: SIZE AND MEASUREMENT OF THE INFORMAL ECONOMY IN 110 COUNTRIES
AROUND THE WORLD*

“Besides informal employment in the rural and non-rural sector also other measures of informal employment like the share of employees not covered by social security, own account workers or unpaid family workers are shown. The most influential factors on the shadow economy and/or shadow labor force are tax policies and state regulation, which, if they rise, increase both. Furthermore the discussion of the recent micro studies underline that economic opportunities, the overall burden of the state (taxes and regulations), the general situation on the labor market, and unemployment are crucial for an understanding of the dynamics of the shadow economy and especially the shadow labor force” writes Friedrich Schneider in  The Shadow Economy and Work in the Shadow: What Do We (Not) Know?

 

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