Measuring the Global Shadow Economy

Measuring the Global Shadow Economy

The Prevalence of Informal Work and Labour

Colin C. Williams and Friedrich Schneider

This book brings together two leading researchers in the field to provide a comprehensive overview of the shadow economy from a global perspective. Reviewing the advantages and disadvantages of different ways of measuring the informal sector, the authors evaluate its size and key determinants across the world. Williams and Schneider clearly establish the persistence and prevalence of the shadow economy, analysing the narrowness of existing policy approaches and explaining how these fail to address the key factors for its existence and may even exacerbate the problem.

Chapter 6: The shadow labour force in developing and transition economies

Colin C. Williams and Friedrich Schneider

Subjects: economics and finance, labour economics, public finance, social policy and sociology, labour policy

Extract

Part II revealed the cross-national variations and determinants of the size of the shadow economy using the MIMIC indirect measurement method. Here, in Part III, we seek to uncover the cross-national variations in participation in the shadow labour force using data collected from direct surveys and to explore the determinants of these cross-national variations. In this chapter, the aim is to evaluate the variations in the size and character of the shadow labour force across developing and transition economies along with the country-level determinants that shape the magnitude and nature of employment in the shadow labour force. To do this, we here report International Labour Organization (ILO) estimates of the level and nature of what it terms ‘employment in the informal economy’ across 36 developing and transition economies for which the ILO has collected data. The outcome will be to reveal not only significant cross-national variations in the extent and nature of participation in the shadow labour force across developing and transition economies but also that there are significant correlations between cross-national variations in the extent and nature of participation in the shadow labour force and cross-national variations in GNP per capita, corruption, poverty, taxation and social contribution levels.

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