THE EFFECTS OF THE SHADOW ECONOMY ON THE LABOUR MARKET AND ITS REFLECTION ON THE RATE OF THE UNPLOYMENT

-The objective of this paper is discusses the main drivers of the shadow economy are (in order): tax and social security burdens, tax morale, the quality of state institutions and labour market regulation. A reduction in the tax burden is therefore likely to lead to a reduction in the size of the shadow economy. Indeed, a virtuous circle can be created of lower tax rates, less shadow work, higher tax morale, a higher tax take and the opportunity for lower rates. Of course, a vicious circle in the other direction can also be created.
- Given this relationship, the high level of non-wage costs (averaging 39 per cent of total labour costs) and the penalty on individuals who move from earning one third to two thirds of the median wage .
-The effects  of the shadow economy on the labour market and the relationship between the size of the shadow economy and unemployment