Determinants of the size of the underground economy: A cross country analysis.

摘要

The underground economy has increasingly been of interest to policy makers and is a fact of life in today's world. Indicators such as income, unemployment, and consumption are unreliable when there is underground economy in a country, which makes policies based on these indicators potentially less effective. A significant underground economy can erode a country's tax and social security base, thus negatively affecting the provision of public services. It is important to understand the causes of the underground economy in order to design and implement effective policies to deal with this problem. The goal of this study is to contribute to the current literature on the causes of the underground economy. The study tests the hypotheses that tax burden, regulatory burden, corruption, and weak legal environment lead economic agents to take their activities "underground". It differs from earlier studies by using a more recent and expansive dataset. Similar to previous studies, it finds a negative effect of tax burden and quality of legal environment. Contrary to previous studies it finds a negative effect of regulatory burden on the underground economy.;Key words: Underground economy, tax burden, regulatory burden, legal environment.