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Review of Economic Perspectives

Národohospodárský obzor; The Journal of Masaryk University

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Volume 17, Issue 3


Determinants of the Shadow Economy in the Czech Regions: A Region-Level Study

Jakub Buček
Published Online: 2017-09-23 | DOI: https://doi.org/10.1515/revecp-2017-0016


This paper investigates the size and development of the shadow economy in the Czech Republic on the state-level base over the 2005-2014 period. The multiple indicators multiple causes (MIMIC) model is used to assess the estimation of the shadow economy size. I investigate how labour market, number of people with at least one distraint, and the burden of taxation might contribute to the existence of the shadow economy. While the former two are important determinants of the shadow economy, I find no evidence to prove any significant impact of distraints on the shadow economy size. As for the country’s particular regions, I find that those surrounding big cities, especially Prague, have, on average, a smaller shadow economy size, whereas regions in the borderlands (former Sudetenland) suffer from a larger shadow economy.

Keywords: Shadow Economy; MIMIC Model; Regions; Tax Burden

JEL Classification: O17; H26


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About the article

Received: 2017-06-12

Accepted: 2017-08-08

Published Online: 2017-09-23

Published in Print: 2017-09-01

Citation Information: Review of Economic Perspectives, Volume 17, Issue 3, Pages 315–329, ISSN (Online) 1804-1663, DOI: https://doi.org/10.1515/revecp-2017-0016.

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© 2017 Jakub Buček, published by De Gruyter Open. This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License. BY-NC-ND 3.0

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