Теневая экономика в России и её особенности. (На английском языке)

Employment approach asserts that a decrease in labor force participation in the official (registered) economy can be seen as an indication of increased activity in the underground economy if total labor force participation is assumed to be constant, ceteris paribus (Schneider March, 2000). In other words, employment approach assumes increasing underground economic activity (increasing employment in underground economy) when the ratio of employment to population is decreasing and the ratio of labor supply to population is being constant approximately.
This approach’s advantage is its’ simplicity. Employment approach needs only simple calculations and comparisons. Although its’ simplicity, it has two major disadvantages. At first, this approach does not include and measure second job owners. People can work in both official and underground economy. But employment approach does not consider this point. Second, the changes in the ratios may have different reasons such as social reasons (for example, immigration from rural to urban areas or increasing number of women in employment). Therefore, employment approach’s indicators may be unreliable and results of that approach may yield misleading conclusions.
c. Tax Auditing Approach
In many countries, taxpayers declare their taxable income amount to government agencies. The amount of taxable income or tax return can be wrong because of misunderstanding of related tax law, calculation mistakes or tax evasion. Tax authorities aim to solve that problem by auditing taxpayers and their tax returns
So, in that approach, tax authorities analyze tax returns and determine amount or undeclared income. That undeclared income amount is used for estimating underground economy.
d. Monetary Approach
Monetary approach, as its name suggests; employs monetary statistics for estimating underground economy. This approach consists of simple currency ratio method, transaction method and currency demand method.
We think, application of this method in our country cannot yield reliable estimators as a result of inadequate supervision. In Turkey, the ratio of examined or audited taxpayers to total taxpayers is approximately 1 percent. The insufficient number of tax auditors in Ministry of Finance is the main reason of that lack of supervision or auditing.
d.1. Simple Currency Ratio Method
Currency has a basic comparative advantage over checks for payment of purchases of services and goods that individuals can hide from the authorities. Simple Currency Ratio (SCR) Method depends on that aforementioned comparative advantage. According to SCR method, a rise in currency stocks and payments are indicator of transactions, which are not registered by government.
Cagan first used this method in 1958, then Guttmann developed it in 1977. SCR method is explained below by using basic equations and identities.

The solution of these equations yields general formula, which can be seen at below.

The general formula or solution enables us to determine the size of underground economy by using known parameters of economy. The SCR method employs following assumptions to reach the general solution.
- All payment transactions in the underground economy are only realized by using currency.
- The ratio of currency to demand deposits remains constant except for changes induced by the growth of unreported income.
- Underground economy’s income velocity of money is equal to registered (official) economy’s income velocity of money.
First assumption implies that underground or unregistered transactions are always paid by currency, check is never used. Therefore ku approaches infinity, limit of kr approaches a constant as a result of second assumption and third assumption implies β = 1.
Imposing these restrictions on the general solution yields,

That last equation is mathematical representation of the simple currency ratio method.
Examinations of these last equations reveal theoretical defects of simple currency ratio method. According to these equations, any improvements in the measurement of official or registered economy will increase rather than decrease the estimated size of underground economy and estimated ratio of underground economy to official economy is unaffected by improvements.
d.2. Transaction Method
Transaction method developed by Feige in 1979. The basic assumption of this method is the existence of a constant relation over time between the volume of transactions and the official GDP. This assumption and therefore Feige’s method emerge from Fisher’s quantity equation. In this method, relating total nominal GDP to total transactions, the GDP of the underground economy can be calculated by subtracting the official GDP from total nominal GDP (Schneider, March 2000). In order to estimate the size of underground economy, this approach requires determination of base year in which there is no underground economy. In the base year, the ratio of P*T to nominal GDP is assumed at the normal level and it stays at its normal level, if the underground economy does not exist. In this method, when a certain period’s official GNP value is subtracted from the related period’s GNP value that is determined by the related period’s value of M*V, one can determine the size of the underground economy.
Feige enlarged Guttmann’s analysis. In Gutmann’s analysis, underground economy transactions are realized only by using currency. But in Feige’s analysis, in addition to currency, financial instruments such as checks and bills may also take place in underground economy transactions.
Despite of the theoretical strength of the transaction method, there are also several difficulties in application. Determining a base year with no underground economy is not an easily acceptable assumption and the assumption for constant normal ratio over time is also not easily acceptable. In addition to these, one cannot get precise figures of the total volume of transactions. So there is also a data availability problem in the application stage. In sum, although the method is theoretically attractive, satisfying the empirical requirements to obtain a reliable estimate for the underground economy is not easy.
As we know quantity equation implies M*V=P*T and in this equation, M is money, V is velocity, P is prices and T is total transactions. Fisher’s equation of exchange specifies the equality between the total volume of payments (M*V) and the total volume of transactions (PT).
(C+D)*V=P*T and the size of underground economy is equal to V*M minus official economy. In the Feige’s approach, money supply consists of currency in circulation (c) and deposit (D). Fisher’ equation becomes (C+D)*V=P*T.
d.3. Currency Demand Method