Abstract
The main focus of this paper is on the shadow economy labor force in OECD, developing and transition countries. As well as informal employment in the rural and non-rural sector, other measures of informal employment, such as the share of women and men, are also shown. The most influential factors on the shadow economy labor force are tax policies and state regulation, which, if they rise, increase shadow economy activities. Furthermore, the discussion of recent micro studies underlines 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 labor force.
Notes
Compare also the CitationOECD (2009) report with the title Is informal normal: Toward more and better jobs.
In this study, a microeconometric investigation is undertaken confirming the facts discussed here under ceteris paribus conditions.
The assumption that the shadow economy labor force is at least as high in rural areas as in major cities, is a very modest one and is supported by CitationLubell (1991). Some authors (e.g., CitationChickering & Salahdine, 1991; CitationLubell, 1991; CitationPozo, 1996) argue that the illicit labor force is nearly twice as high in the countryside as in urban areas. But since no (precise) data exist on this ratio, the assumption of an equal size may be justified by arguing that such a calculation provides at least minimal figures.
The shadow economy labor force consists of estimated full-time ‘black’ jobs, including unregistered workers, illegal immigrants and second ‘black’ jobs.
See also CitationFeld and Schneider (2010), CitationHazans (2011), CitationSchneider (2005, Citation2011), CitationSchneider and Enste (2000), CitationSchneider, Buehn, and Montenegro (2010), CitationWilliams and Windebank (2001a, Citation2001b) and CitationWilliams (2010a, Citation2010b, Citation2011a, Citation2011b).
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