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This research analyzes how the shadow economy influences economic development and employment levels.

An analysis of the influence of shadow economy on economic development

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Analysis reveals mixed effects of shadow economy on economic development in 124 economies, suggesting policy implications.

This research analyzes how the shadow economy influences economic development and employment levels.
Employs Multiple Indicators and Multiple Causes model to estimate shadow economy size.
Uses Bayesian Model Averaging for uncertainty management from various determinants.
Data covers 124 post-industrial and developing economies from 1991 to 2017.
Finds both positive and negative effects of the shadow economy on economic development.
Highlights that the 'net' effect on official sectors remains uncertain.
Implications suggest that policies to reduce the shadow economy must improve formal sectors to absorb unemployment.

Dima et al. (2026) studied this question.

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