Does taking the shadow economy into account matter when measuring aggregate efficiency?

Pierre-Guillaume Méon (1) , Friedrich Schneider (2) , Laurent Weill (3)

1 Dulbéa - Département d'économie appliquée de l'université libre de Bruxelles
2 Department of Economics
3 Institut d'Etudes Politiques

We analyze how adding the shadow economy to official output figures affects estimated technical efficiency at the country level. We find that this only slightly affects the ranking of efficiency scores, but increases average efficiency in a sample of 87 to 97 countries, both developed and developing. Our results are robust to the functional form of the production technology and the adjustment of labour to account for years of schooling.

Mots clés: Social Sciences & Humanities

Pierre-Guillaume Méon, Friedrich Schneider, Laurent Weill. Does taking the shadow economy into account matter when measuring aggregate efficiency?. Applied Economics, 2010, pp.1. ⟨10.1080/00036840903166210⟩. ⟨hal-00582277⟩