The German Shadow Economy: Parted in a United Germany?

This paper analyzes differences between shadow economic activities in the western and eastern part of Germany. Due to new empirical results easterners' engagement in shadow economic activities seems to be lower than the engagement of their western neighbors. How can we explain this seemingly parted shadow economy in an otherwise united Germany? We show that current explanations of shadow economies are far from sufficient in explaining different shadow economic activities in Germany. Hence, additional arguments are presented recurring to an institutional perspective.