Individual behaviour in Australia's shadow economy: facts, empirical findings and some mysteries
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Schneider, Friedrich
Braithwaite, Valerie
Reinhart, Monika
Australian National University. Centre for Tax System Integrity
Australian Taxation Office
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Centre for Tax System Integrity (CTSI), Research School of Social Sciences, The Australian National University
Australian Taxation Office
Australian Taxation Office
Abstract
This paper attempts to explain the behaviour that motivates individuals to engage in the
shadow economy. Results show that those who fear being caught by tax authorities are
less likely to supply or purchase work in the shadow economy. Further, those who earn
more money in the ‘official’ economy, work less in the shadow economy, but purchase
more shadow economy work. The results of logistic regressions show that when working
in the shadow economy is seen as socially acceptable, shadow economy activities are
higher.
Additional findings showed that, on average, a shadow economy worker earned
AUS$2135.31 during 2000, and households spent AUS$2293.00 for these services. Using
micro-data to calculate an overall aggregate figure for the estimated size of the shadow
economy in Australia during 2000, it was found that between 4.81% and 8.8% of the
gross national income (GNI) was earned in the shadow economy.
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Working/Technical Paper
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Open Access
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