Policy highlights:

  • A study conducted in 110 developing, transition and OECD countries shows the average size (in % of official GDP) of shadow economies is 41% in developing countries, 38 % in transition countries and 18% in OECD countries.
  • The main driving forces for the growth of shadow economies are the tax burden, the intensity of government regulation, and social security contributions.
  • The consequences of such growth are particularly disastrous for developing countries, where a 1% growth rate results in a 0.6% decrease in the ‘official’ GDP.
  • Given the fact that government actions are the main reason for people to engage in shadow economic activities, governments that want to effectively curb their national shadow economy should first analyse the consequences of their own policy decisions.
Connected themes
Share this post

Related items

AERC Regional Policy Forum summary

The AERC hosted a virtual Regional Policy Forum on 28 March 2022. The forum brought together key stakeholders who play important roles in shaping new research findings, paving new policy directions, and initiating innovative practices in the areas of youth and employment.

Getting up to speed with inclusive development

The INCLUDE team’s reading list: March 2022 Every month we share with our readers a…

Identifying Economic Sectors to Create Employment for Youth in Africa: key findings from selected country cases

Growth Sectors for Youth Employment (GSYE) is an African Economic Research Consortium (AERC) collaborative research…

The world youngest continent is looking for work

The African continent is undergoing an important demographic transformation that will, for the better or the worse, drastically change its labor market. According to the World Bank, every year 12 million young people enter the job market while only 3 million formal jobs are created. With a median age of 25 years old, the African continent is the youngest in the world.

Maya Turolla Profile
website banner - webinar 6 (1000 x 400 px)
YOUTH @ WORK: the Future of Work Webinar Overview

How can the Fourth Industrial Revolution support youth employment in Africa? This was the main question of the closing session of our Youth@Work webinar series

Siri profile picture