The shadow economy is defined as: "Illicit economic activity existing alongside a country's official economy." It plays a major role in many countries as people evade taxes and regulations by employing people illegally.
The shadow economy has implications that extend beyond the economy to the political order, writes Dominik H. Enste. It is not solely an economic problem but rather requires country-specific analysis of causes and consequences in order to develop policy measures appropriate to each country. "Organized crime, corruption, and illegal employment should nevertheless be fought through stricter controls and enforcement," Enste adds.
According to Melanie Khamis, who examines the formalization of jobs and firms in emerging market economies through registration reform, "Informal firms make up a major share of the economy in most developing countries. Expanding formalization could increase government tax revenues, boost firm profits and national income, and increase employee well-being by improving access to social security and health and workers’ benefits."
Hundreds of Australian school students will strike in protest of the failure of politicians to take urgent action against climate change. Read more.
Newly published articles from IZA World of Labor
As new evidence emerges, the IZA World of Labor Editorial Board will commission updated versions of existing articles, listed below are two of the first of these updates. If you would like more information on article updates and how to access them, please visit “What are article updates?” on our FAQ section.
All newly published one-pagers are also available to read and download in German.Find out more.
Immigrant entrepreneurship: The evidence so far
The Brexit referendum in the UK and the 2016 US presidential election brought a significant amount of immigrant resentment to the fore in countries that many deem to be quite immigrant friendly. With these surprising developments, the impacts, contributions, and achievements of immigrants became a matter of fundamental debate.