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New Zealand. In countries that have had most trouble overcoming the financial crisis (Greece, Spain,
Portugal), there was only a small decrease of the
shadow economy between 2003 and 2011 (Figure 2).
Schneider measures the peak of the shadow econo-
ESTIMATES OF THE SHADOW
ECONOMY IN OECD
COUNTRIES 2003-2011
Figure 1
In 2009, the economic crisis has led to an increase of
the shadow economy in all OECD countries. But
many European countries were able to overcome
the crisis more quickly than expected, and this economic recovery has resulted in a decrease of the
shadow economy in most OECD countries in 2010
which is expected to continue this year. This development, in particular the decreased incentive to
work on the black market because of an increase of
opportunities on the job market, has brought up the
debate about the development of the shadow economy again, because this development shows that only
if the official economy is attractive people have an
incentive to switch from the black market to legal
employment. Hence, it is crucial that governmental
institutions (on all levels) set incentives that increase
the attractiveness of legal employment compared to
the shadow economy.
SIZE OF SHADOW ECONOMY
2003–2011
as percentage of GDP
Austria
Belgium
Denmark
Finland
France
Germany
Greece
Ireland
Italy
Netherlands
Portugal
Spain
Sweden
United Kingdom
Norway
Switzerland
2003
2008
2009
2011
Australia
Canada
Schneider (2011) estimates the extent of the shadow
economy in OECD countries and analyzes the impact of the financial crisis in 2009 on employment on
the black market. In this study the shadow economy
is estimated based on a combination of the MIMICapproach (“Multiple Indicators, Multiple Causes“)
and the Cash-approach. The MIMIC approach is
based on the assumption that the shadow economy is
not directly measurable, but that it can be estimated
by analyzing the visible causes of it (taxes, the extent
of regulations, etc.) and the indicators measuring the
shadow activity (cash, official hours worked, etc.).
This approach only allows to draw relative comparisons of the shadow economies of different countries. In order to calculate absolute values of shadow
economies (e.g., in percent of GDP), the Cash-approach is useful. This approach is based on the idea
that on the black market people pay cash. Hence, a
cash-demand function can be used to estimate the
transactions paid for in cash, which then allows to
calculate the volume of the shadow economy.
Japan
New Zealand
United States
0
5
10
15
20
25
30 %
Source: Schneider (2011).
Figure 2
DECREASE (-) OF SHADOW ECONOMY
2003–2011
as percentage of GDP
Austria
Belgium
Denmark
Finland
France
Germany
Greece
Ireland
Italy
Netherlands
Portugal
Spain
Sweden
United Kingdom
Norway
Switzerland
Australia
Figure 1 shows Schneider’s estimates of the shadow
economies in OECD countries as percentage of
GDP from 2003 to 2011. The figure indicates that the
shadow economy in OECD countries decreased in
all countries over this period. It decreased most (by
about 25 percent) in Australia, Austria, France, and
Canada
Japan
New Zealand
United States
-0.30
-0.25
-0.20
-0.15
-0.10
-0.05
0.00 %
Source: Schneider (2011).
89
CESifo DICE Report 3/2011
Database
my in OECD countries in 1997/1998. From then on
there was a continuous decrease of the estimated
shadow activities until 2008, when the financial crisis
hit. On average of all OECD countries, the shadow
economy was 13.8 percent of GDP in 2009, an increase
of 0.5 percent compared to 2008. Because of the economic recovery in 2010, the shadow economy decreased again in most OECD countries. The shadow
economy is expected to continue to decrease in 2011.
Exceptions to this trend are Portugal and Greece.
S. F.
Reference
Schneider, F. (2011), „Der Einfluss der Erholung von der Wirtschaftskrise auf die Schattenwirtschaft in Deutschland und anderen
OECD – Staaten: Ein (erneuter) Rückgang“, http://www.econ.jku.at/
531, accessedJuly/13/2011, Johannes Kepler Universität, Linz, 14.
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