Size, Causes and Consequences of the Underground Economy

Chapter 1Introduction

Christopher Bajada and Friedrich Schneider

Background and Objectives

As crime and other underground economic activities (including shadow economy ones) are a fact of life around the world, most societies have attempted to control these with measures ranging from education to punishment and prosecution. Gathering statistics about who is engaged in underground activities, the frequencies with which these activities are occurring and the magnitude of the problem is crucial for making effective and efficient policy decisions for the allocation of a country’s resources to tackling this problem. Unfortunately, it is very difficult to get accurate information about these activities in terms of value added or from a labour market ...