The shadow economy is widespread, accounting for around one tenth of economic activity in the UK and over one quarter of economic activity in some European countries. Nevertheless, the subject gets little attention, partly because of the difficulty of collecting reliable data. This publication, by two leading international researchers in this field, provides a comprehensive survey of the topic. It examines the size, the causes and possible solutions to the problem of widespread shadow economic activity. The monograph is international in scope, covering not just the OECD but also less developed countries.
The authors assess the main methods of calculating the size of the shadow economy. They then examine the relationship between the extent of such economic activity and the level of taxes, regulation and the legal and institutional framework. These issues are found to be crucial in understanding how to tackle the problem. Practical policy proposals are also made by the authors.