Illicit work, social security fraud, economic crime and other
shadow economy activities are fast becoming an international
problem. This second edition uses new data to reassess currency
demand and the model approach to estimate the size of the shadow
economy in 151 developing, transition, and OECD countries. This
updated edition argues that during the 2000s the average size of
the shadow economy varied from 19 per cent of GDP for OECD
countries, to 30 per cent for transition countries, to 45 per cent
for developing countries. It examines the causes and consequences
of this development using an integrated approach to explain deviant
behaviour that combines findings from economic, sociological, and
psychological research. The authors suggest that increasing
taxation and social security contributions, rising state regulatory
activities, and the decline of the tax morale are all driving
forces behind this growth, and they propose a reform of state
public institutions in order to improve the dynamics of the
official economy.
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