Does taking the shadow economy into account matter when measuring aggregate efficiency?

We analyze how adding the shadow economy to official output figures affects estimated technical efficiency at the country level. We find that this only slightly affects the ranking of efficiency scores, but increases average efficiency in a sample of 87 to 97 countries, both developed and developing. Our results are robust to the functional form of the production technology and the adjustment of labour to account for years of schooling.

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Year of publication:	2011-07
Authors:	Méon, Pierre-Guillaume ; Weill, Laurent ; Schneider, Friedrich
Institutions:	Solvay Brussels School of Economics and Management, Université Libre de Bruxelles
Subject:	shadow economy \| income \| aggregate productivity \| efficiency

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Series:	ULB Institutional Repository.
Type of publication:	Book / Working Paper
Notes:	Published in: Applied economics (2011) v.43 n° 18,p.2303-2311
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10009368189