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 4: Size, Development and Perception of the Shadow Economy in Switzerland

Christoph A. Schaltegger


Christoph A. Schaltegger 4.1 INTRODUCTION Size, development, causes and problems of the shadow economy have been the cause of controversy for years. In an interview on 10 January 2000, Milton Friedman argued: ‘The black market was a way of getting around government controls. It was a way of enabling the free market to work. It was a way of opening up, enabling people’ (Public Broadcasting Service, 2000). On the other hand, Doris Leuthard, minister of economic affairs in Switzerland, intensified her fight against black market activities with the words: Moonlighters are cheating the government by evading taxes and social security contributions. [. . .] I am aware of the fact that moonlighting can never be exterminated completely. It is in the nature of the shadow economy that authorities can never eliminate all forms of illegal work. Nevertheless, a new law is important for two reasons: First of all, moonlighting represents a threat for the protection of the employees. Often, black workers face lower wages and have to work under precarious and often uncertain conditions. He or she is exposed to the arbitrariness of the employer. Second, the new law will secure our accompanying measures to the bilateral treaty with the EU in the case of ‘freedom of movement and residence’ (Leuthard, 2007). Independent of different points of view regarding the impact of the shadow economy on the welfare of society, according to several surveys the shadow economy grew strongly in almost all OECD countries during the last 30 years (see for example Thomas,...

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