A Comparative Analysis of Shadow Economy in Croatia and Slovakia
A Comparative Analysis of Shadow Economy in Croatia and Slovakia

Author(s): Sabina Hodžić, Jana Kockovicova
Subject(s): Labor relations, Economic policy, Comparative politics, Fiscal Politics / Budgeting
Published by: Masarykova univerzita nakladatelství
Keywords: fiscal policy; shadow economy; labour approach; Croatia; Slovakia;
Summary/Abstract: Shadow economy includes all unrecorded economic activities, employment and income. All shadow economy activities are unregulated, untaxed, unregistered and unmeasured by official statistics. Since Croatia and Slovakia are countries in transition, numerous elements exist that support shadow economy in international exchange. Shadow economies in Croatia and Slovakia influence all kinds of economic activities with allocative, stabilizing, welfare and redistributive effects. The objective of this paper is a comparative analysis of shadow economy in Croatia and Slovakia in the period 2005 –2014. The labour approach is used because it relies on the difference between real and registered use of labour. Results show that, in this period, the level of Croatian shadow economy under the labour approach was highest in 2008 (3.65 percent), while in Slovakia it was highest in 2006 (27.47 percent). In order to improve the quality of the fight against corruption and to reduce the level of shadow economy, it is necessary to continue the development of the judiciary, take actions to improve the independence of the judiciary, review the principles of financial support for law enforcement and provide measures to improve their wages.

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