Country-level determinants of the shadow economy during 2005-2013: The case of Greece

Abstract

In 2008, the average share of shadow economy in Europe was 19.4 percent, in 2012-19 percent, while in Greece these values of shadow economy were bigger: in 2008-24.3 percent and in 2012-22.3 percent of share of shadow economy. The scientists having researched shadow economy focused on the motives/reasons that prompt businessmen to operate underground. Shadow economy as a hidden factor is difficult to measure, making it necessary to use multiply observable indicators to approximate the extent of the shadow economy (Ruge, 2010). That is why such global organisations as the World Bank and others announce annual figures of shadow economy in most countries, including and evaluating their macroeconomic factors. The analysis of the scientific literature revealed that, in general sense, shadow economy emerges in such spheres as taxation, social security and labour aspects of undeclared work, so the aim of this article is not to measure the scope of shadow economy, but to identify what country-level determinants from the spheres mentioned above have the strongest impact on the scope of shadow economy in Greece during 2005-2013. The results of the research will enable to develop the recommended directions that could be followed seeking to reduce the scope of shadow economy in Greece.