Shadow Economy in Slovenia: The Labour Approach

Abstract

The all-around notorious shadow economy phenomenon is subject to constant reshaping, regarding both time and place, which results in a somewhat unclear definition. We use the following definition: all productive activities, whose output is legal, but is deliberately concealed from the authorities, usually for gaining financial benefits. Different methods of quantifying the size of the shadow economy have been developed. We focus on the labour approach, with Slovenia as the case study during the last decade. The importance of such an analysis lies in the ambiguous effects of the shadow economy and their policy implications. We found that the shadow economy that relates only to the unemployment discrepancies in Slovenia amounts on average to around 6 percent of the official economy, and tends to slightly decline over the most recent years. On the other hand, employment discrepancy and more detailed activity-level results give much higher values and even an increase in the shadow economy: on average around 20 percent in the studied period.shadow economy, indirect methods, employment discrepancies, labour approach