Non-Monetary Approaches to Measuring the Black Economy

Abstract

The last two chapters have examined various monetary approaches to measuring the size of the black economy, and have also surveyed some of the results of research using these approaches. Monetary approaches have been by far the most popular methods used in assessing the extent of black-economy activity. The principal reasons for this are (i) that monetary statistics are readily available and, (ii) a strong presumption in the literature that cash is the modus operandiof the black economy. However, other direct and indirect methods of assessment have been developed and it is the purpose of this chapter to review some of these alternative techniques. This chapter will concentrate on the indirect methods. (Direct methods, using tax audits, were briefly examined in Chapter 1).