Summary
In this chapter the various methods to measure the size and development of the shadow economy are shortly discussed and criticized. Then the results of two methods, the currency demand and model approach are presented and it is shown that for the year 1978 and for 16 of 24 OECD-countries the size of the shadow economy is more than 5% of the GNP. The next step is to analyze the effects of policy change on the shadow economy, like a major decline of the direct tax burden in the year 1989 in Austria with the expectation of a decreasing shadow economy. However, one observes an increasing shadow economy in the years 1989 to 1991 in Austria, because other important factors, why people work in the shadow economy, like regulation, have increased during this time, which offset the lower tax burden.
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Schneider, F. (1994). Measuring the Size and Development of the Shadow Economy. Can the Causes be Found and the Obstacles be Overcome?. In: Brandstätter, H., Güth, W. (eds) Essays on Economic Psychology. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-48621-0_10
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DOI: https://doi.org/10.1007/978-3-642-48621-0_10
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