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Institute of Public Finance

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Underground Economy in Croatia

Marija Švec, Sladorana d.d., Zupanja

The subject of this paper is to estimate the size of underground economy in the period 2001-2007 using labour approach. Two types of data are used: administrative and survey. The main questions are: How did the activity rates move? What is the relationship between activity rates and the size of shadow economy? Is there correlation between official employment, official unemployment and unofficial employment (shadow economy) and what is it like? What is the position of Croatia considering the members of the European Union? It is presumed that the increase of activity rates causes decrease of underground economy. However, this assumption is valid only for administrative data. Correlation analysis is based on regression models and given results are quite logical. If Croatian and European underground economy is compared, it can be confirmed that the position of Croatia is extremely poor. Given results are approximative and show the level of Croatian underground economy which is presumably underestimated. These phenomena occur because of available statistics and method limitations.

Keywords:  shadow economy, unofficial economy, measuring shadow economy, labour approach, Croatia, European Union

Year:  2009   |   Volume:  33   |   Issue:  4   |   Pages:  401 - 429

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 December, 2009
IV / 2009
EBSCO Publishing
ISSN 1846-887X
e-ISSN 1845-9757
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