The shadow economies of Western Europe

The latest empirical research indicates a strong increase in the size of the shadow economy in Western Europe, over the period 1970 to 1990. For 11 of the 17 investigated OECD-countries the size of the shadow economy in 1990 was more than 10% of GNP. Analysis shows that the major causes of the shadow economy are the direct and indirect tax burden, and government regulation.