Subterranean Labor Markets: A Conceptual Analysis

Abstract

A taxonomy is developed in which subterranean markets are divided into two basic categories: those for goods and services that are intrinsically illegal (Category I) and those where the transaction rather than the object traded is illegal or constrained (Category II). The second category is subdivided into issues of explicit and implicit taxatation and various other applicable topics, which are treated in detail in the paper in an attempt to provide an analytic handle on the subject. The author notes that since market information is available to transactors it must be available to law enforcers. Since subterranean markets persist despite this, there may be some optimal tolerance point between the shadow and sunlight sectors.