Handbook on the Shadow Economy
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Handbook on the Shadow Economy

Edited by Friedrich Schneider

The shadow economy (also known as the black or underground economy) covers a vast array of trade, goods and services that are not part of the official economy of a country. This original and comprehensive Handbook presents the latest research on the size and development of the shadow economy, which remains an integral component of the economies of most developing and many developed countries.
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Chapter 5: Regional Variations in the Nature of the Shadow Economy: Evidence from a Survey of 27 European Union Member States

Colin C. Williams and Jan Windebank


Colin C. Williams and Jan Windebank 5.1 INTRODUCTION For much of the last century, a popular and recurrent belief was that the shadow economy was disappearing and becoming a minor residue existing only in a few marginal enclaves of the modern economy (Geertz, 1963; Lewis, 1959). This modernisation thesis, however, has been increasingly refuted. It is now recognised that the shadow economy is relatively widespread and growing relative to the legitimate declared economy in many global regions (Schneider and Enste, 2000, 2002; ILO, 2002a, b; OECD, 2002; Feige and Urban, 2008; Schneider, 2008; Charmes, 2009; Jütting and Laiglesia, 2009; Rodgers and Williams, 2009). Indeed, a recent OECD report finds that out of a global working population of some 3 billion, around two-thirds (1.8 billion) work in the shadow economy (Jütting and Laiglesia, 2009). Such work, therefore, is far from being a small residual realm. It is a prominent feature of the contemporary global economy. Given this, the aim in this chapter is to further contribute to understanding this realm by moving beyond the dominant focus in much of the current literature on the variable size of the shadow economy and instead, unravelling the nature of the shadow economy and how this varies spatially. To do this, the findings of a survey based on 26 659 faceto-face interviews conducted in 27 EU member states during 2007 will be here reported. To commence, the first section will briefly review the extant literature on the shadow economy and in doing so,...

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