08.02.02, C:\Studien\Pfusch\ShadEcSouthAmerica.doc 1 February, 2002 C:/Studien/Pfusch/ShadEcSouthAmerica.doc First Draft THE SIZE AND DEVELOPMENT OF THE SHADOW ECONOMIES AND SHADOW ECONOMY LABOR FORCE OF 16 CENTRAL AND SOUTH AMERICAN AND 21 OECD COUNTRIES: FIRST RESULTS FOR THE 90S by Friedrich Schneider*) Abstract: Using the currency demand and DYMIMIC approaches estimates about the size of the shadow economy in 16 Central and South American and 21 OECD countries are presented. The average size of the shadow economy (in percent of official GDP) over 2000/2001 in 16 Central and South American countries is 42.6% and in 21 OECD countries 16.7% of “official” GDP. The average size of the shadow economy labor force (in percent of the official labor force) of the year 2000/2001 in 16 Central and South American countries is 22.3% and 7 OECD-countries 15.3%. An increasing burden of taxation and social security contributions combined with rising state regulatory activities are the driving forces for the growth and size of the shadow economy (labor force). JEL-class.: O17, O5, D78, H2, H26. *) Professor Dr. Friedrich Schneider, Department of Economics, Johannes Kepler University of Linz, Altenbergerstrasse 69, A-4040 Linz-Auhof, Austria. Phone: 0043- 732-2468-8210, Fax: 0043-732-2468-8209. E-mail: friedrich.schneider@jku.at , http://www.economics.uni-linz.ac.at/Members/Schneider/default.htm .