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Shedding Light on the Driving Forces of the Romanian Shadow Economy: An Empirical Investigation Based on the MIMIC Approach

  • Adriana AnaMaria Davidescu
  • Friedrich Schneider
Chapter
Part of the Contributions to Management Science book series (MANAGEMENT SC.)

Abstract

In order to diminish the shadow economy as an important policy goal in EU countries, it is necessary to be aware of the magnitude and development of the shadow economy, offering to governments the opportunity to elaborate targeted policy measures meant to either discourage shadow economic activities or incentivize their conversion into official ones.

The focus of the paper lies on the “driving forces” of the development of the Romanian shadow economy providing also the most recent estimation of the dynamics and magnitude of the Romanian informal economy for the period 2000–2015. The MIMIC model was used taking into account multiple causes and multiple indicators of the Romanian shadow economy.

The empirical results revealed that the main driving forces are unemployment, regulatory quality, self-employment, and indirect taxation. The size of the Romanian shadow economy had decreased until 2008, reaching the value of about 27.8% of official GDP. During the economic crisis, a slow increase of the shadow economy took place, while for the last quarters, a slow decrease can be observed.

Keywords

Shadow economy Causes Unemployment Self-employment Institutional credibility MIMIC model Romania 

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Copyright information

© Springer Nature Switzerland AG 2019

Authors and Affiliations

  • Adriana AnaMaria Davidescu
    • 1
    • 2
  • Friedrich Schneider
    • 3
  1. 1.Department of Statistics and EconometricsBucharest University of Economic StudiesBucharestRomania
  2. 2.Department of Labour PoliciesNational Scientific Research Institute for Labour and Social ProtectionBucharestRomania
  3. 3.Department of EconomicsJohannes Kepler University of LinzLinzAustria

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