The main goal of this study is two-fold: (1) to provide a general overview of thecontributions to the literature on the informal sector, with a special focus on the PublicChoice approach; and (2) to compare these contributions across two institutionallydifferent types of countries: developed and...

An optimal commodity tax approach is taken to compare trade taxes and VATs when some commodities are produced informally. Trade taxes apply to all imports and exports, including intermediate goods while the VAT applies only to sales by the formal sector and imports. The VAT can achieve...

Given that 60 per cent of the global workforce is in the informal sector, this article develops a typology that classifies economies according to, firstly, where different countries sit on a continuum of informalization and, secondly, the character of their informal sectors. This is then applied...

This comment provides a reply to Prof. Feige's paper with the title “Reflections on the Meaning and Measurement of Unobserved Economies: What do we really know about the ‘Shadow Economy'?”, in which Prof. Feige heavily criticizes me. I show that the same critique which Prof. Feige raises...

This paper reviews the meaning and measurement of unobserved economies germane to tax evasion and macroeconomic information systems. These include the unreported, non-observed, underground, illegal, informal and unrecorded economies. It reviews the progress and shortcomings of national and...

An economy is considered where a possibility to seek rents (a particular case of this activity is corruption) exists along with production. A producer is able to hide part of his output from both bribery and taxation. It is shown that the presence of a shadow sector has different effects in...

Shadow economy is harmful to the economy for various reasons. On the other hand shadow economy restriction has some repercussions. In other words, there is perhaps a sort of trade-off between the restriction of shadow economy and the resulting macroeconomic repercussions. Hence, in the present...

This paper shows why some countries are trapped in an equilibrium with high unofficial economic activity and corruption while other countries are not. The potential for different outcomes follows directly from the complementary nature of unofficial economy and corruption activity