A direct survey on shadow economy and its causes: The case of North Macedonia
A direct survey on shadow economy and its causes: The case of North Macedonia

Summary/Abstract: The goal of this research paper is to assess the magnitude of the shadow economy and identify its main causes by a direct survey approach. The survey is designed to extract information needed to estimate the shadow economy by assessing the main types of economic activities that are carried out in the parallel economy based on the responses of the owners/managers, considering that they are most acquainted with the informal economic activities in their industry. The obtained results show that the magnitude of shadow economy in North Macedonia is about 21%. The index exposes that the shadow economy is relatively high, but it is lower compared to previous estimates using the indirect methods of estimation. The findings also reveal that bribery and corruption, the low quality of public services, the burden on social security contributions and the lack of sound policies to support small and medium businesses are the main factors that continue to lie at the roots of shadow economy in North Macedonia.

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