What question did this study set out to answer?

Re-estimate the scale of shadow economies across European countries and identify the key institutional and economic determinants driving informal economic activity.

December 1, 2019IMF Working PaperOpen Access

Explaining the Shadow Economy in Europe: Size, Causes and Policy Options

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Authors

BKBen KelmansonInternational Monetary Fund KKKoralai KirabaevaInternational Monetary Fund LMLeandro MedinaInternational Monetary Fund

Discussion

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Implication

Economic analysis reveals institutional quality and human capital drive shadow economy size across Europe, suggesting tailored regulatory and digital tax reforms enhance formality.

Key Points

Re-estimate the scale of shadow economies across European countries and identify the key institutional and economic determinants driving informal economic activity.
Re-estimated shadow economy sizes across European nations, with specific emphasis on emerging Eastern European economies.
Evaluated structural drivers of informality, including regulatory quality, governance effectiveness, administrative burdens, and human capital metrics.
Shadow economy activity declined across Europe in recent years but remains substantial, particularly within Eastern European emerging markets.
Regulatory quality, government effectiveness, and human capital represent the primary structural determinants governing the size of shadow economies in emerging Europe.
Formality is effectively promoted through tailored policies targeting administrative burden reduction, enhanced governance transparency, procedure automation, tax compliance, and electronic payment adoption.

Cite This Study

Kelmanson et al. (2019) studied this question.

synapsesocial.com/papers/6a70abaee71d69abee08c56e https://doi.org/10.5089/9781513520698.001

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Implication

Economic analysis reveals institutional quality and human capital drive shadow economy size across Europe, suggesting tailored regulatory and digital tax reforms enhance formality.

Explaining the Shadow Economy in Europe: Size, Causes and Policy Options

Discussion

Member takes

Implication

Key Points

Cite This Study

Explaining the Shadow Economy in Europe: Size, Causes and Policy Options

Discussion

Member takes

Implication

Key Points

Cite This Study

Also Consider

Also Consider