Entrepreneurship and the Shadow Economy
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Entrepreneurship and the Shadow Economy

Edited by Arnis Sauka, Friedrich Schneider and Colin C. Williams

The shadow economy has become the focus of policy makers around the world. This timely book explores the relationship between entrepreneurship and the shadow economy by reviewing how to measure, explain and tackle this hidden enterprise culture. The editors bring together leading authorities in the field to examine existing methods to measure the shadow economy, explore entrepreneurship and shadow economy practices in various contexts, and provide policy suggestions for decreasing the shadow economy. It concludes by encouraging further research in this ever-growing field.
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Chapter 7: A normative analysis of the measures to prevent the shadow economy in Finland

Markku Virtanen


What forms of shadow economy exist in Finland and what is the estimated share of different informal activities in the economy? What kinds of measures have been taken in order to reduce the size of the shadow economy in this country? This chapter seeks answers to these questions. The objective of this chapter is to evaluate the size of the shadow economy in Finland and the measures taken to reduce its prevalence. In Finland, the so-called ‘grey economy’ covers activities in organizations where statutory obligations are defaulted on in order to avoid payment of statutory taxes, accident or employment insurance, pension insurance premiums or customs duties, as well as to obtain unjust financial advantage through avoidance of taxes or payments. This chapter concentrates on the grey economy in businesses more than tax evasion by ordinary people. It is normative and descriptive in the sense that it describes the Finnish situation based on the reports produced by working groups and authorities mainly composed of the Ministry of Finance and the Ministry of Employment and Economy.

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