Advances in Management and Applied Economics

Shadow Economy: Definitions, terms & theoretical considerations

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  • Abstract


    The last decades, many scholars highlighted the shadow economic activities, regarding their disadvantages (unemployment, impoverishment etc) and advantages (intensifies competition, flexibility in employment etc). During the financial crisis, informal activities rose in noisy way, which triggered the development of special definitions to describe a wide range of actions which in turn have gradually configured and updated the content of the shadow economy term. In this paper we present the theoretical background of the shadow economy term, by selecting the main worldwide literature published from 1973 to 2018. Many studies have tried to definite the shadow economy term but none has ever presented explicitly the adjectives and nouns that are related to shadow economy. Taking into account this analysis it would be useful for the scholars to mention extensively the theoretical background about shadow economy, the critiques towards the school of thoughts, in order to choose the appropriate term in each case and to design and implement the indicative method to estimate the size of the shadow economy.


    JEL classification numbers: E26

    Keywords: shadow economy, informal economy, informal sector, shadow banking, tax havens, off shore financial centers.