A Fundamental Contribution to the Analysis of Shadow Economy

Abstract

Schneider has been one of most important authors as regard the analysis of shadow economy. In this article we examine his last two theoretical and econometric contributes. They are sufficient to understand the development of his thinking about the causes and measurement of shadow economy. It is very important his structural equation which is elaborated with the help of microeconomic choices of the operators in the shadow economy. This equation permits to give a clear definition of shadow economy and to elaborate a taxonomic analysis of various activities in shadow economy. To macroeconomic level, Schneider uses the indirect method Multiple-Indicators-Multiple-Causes (MIMIC model), integrated with the measurement of demand for cash regarding the shadow economy. Also the econometric calculus of this phenomenon is very interesting, because two series of statistics are presented. The former regarding the years 1999-2010 and the latter the period 2003-2014. At the end we point and interesting suggestion about the uniformity of the countries considered. It regards the actual situation of some countries as Italy, where the national statistics are not significant because in them there are great differences between their regions. In that case is useful the direct method with interview and questionnaires, that Schneider considered not realizable. With this method and in this condition is possible that the State intervention not is homogenous throughout the country and may present a correct regional articulation, achieving greater effectiveness to contrast shadow economy.

Keywords: shadow economy, microeconomic choices, macroeconomic dates

JEL Classification: D1, O5, H3