Politicians and trade unions raise the issue of illegal employment in order to provoke support, voters feel negatively touched by the presence of illegal employment, often also associated with illegal immigration. In addition there was a severe discussion in Germany about passing a minimum wage...

This paper presents the first MIMIC (multiple indicator multiple causes) model estimate of the size and development of the shadow economy and of do-it-yourself (DIY) activities in Germany from 1970 to 2005. By 2005, they reached a level of about 17% and 4.94%. While the shadow economy has...