SHADOW ECONOMY OF MACEDONIA

Abstract

Measurement and assessment of the shadow economy is an area of research which is always challenging and surrounded with debate and ambiguity. In this research we use the indirect method used by Kaufman and Kaliberda like the Electricity Consumption Method (ECM) as well as the Multiple Indicators Multiple Causes (MIMIC) approach which is structural modeling using the shadow economy as a latent variable considering several causes and indicators of the SE. The ECM results of SE estimates are discussed within the framework of the possible causes of the SE like: tax and social contributions, social transfers paid by the Government of Macedonia (GoM), regulatory intensity, corruption level, global economic crisis. We also give raw estimates of the shadow employment rate. Next, we discuss the structure of the shadow economy by industries in accordance with the ECM method and we once again discuss the informal economy estimates of CEA done in 2009. The estimates of the SE by the State statistical office in Macedonia are also presented. We finish with the MIMIC estimates and give comparative illustration of all known to us estimates of SE in Macedonia so far.