1 Exploring the Underground Economy through System Dynamics to support Public Decision Makers: a preliminary qualitative analysis [*] Enzo Bivona (*) , Francesco Ceresia (**) ,Giovan Battista Montemaggiore (***) Abstract To estimate and analyse the underground economy phenomenon, different methods and approaches have been provided in literature. However, such approaches are very often based on static and linear equilibrium models and seldom adopt simulation tools. This paper results from a research project conducted in the Sicily Region (Italy) aimed at investigating – through the System Dynamics methodology – main causes-and-effects relationships underlying the phenomenon of the “hidden workers” at both firm and self-employment level. By combining micro and macro-analysis, the authors present a preliminary causal loop diagram of the investigated phenomenon. Such feedback structure has been built through the support of managers and representatives of private and public organisations. Key-words Underground economy, irregular workers, public policies, unintended consequences. 1. Introduction In the last decades, in order to generate resources to finance the economic development policies many countries started to pay more and more attention towards the underground economy. In fact, it has been detected that such phenomenon represents a relevant percentage of the national Gross Domestic Product (GDP). According to researches conducted in the area of the OECD (Organisation for Economic Co-operation and Development) countries (Schneider, 2005), the average size of the shadow economy is around 16,4% of the national GDP. It is worth remarking that such a percentage varies from 9,5% to 28,3%. This phenomenon is also relevant in USA, where such rate is about 8,6% of the GDP (Schneider, 2005). [*] This paper results from a research project titled “Up – Rise” (1999/IT.16.1.PO.011/3.11/7.2.4/009 financed by POR Sicilia 2000-2006, line 3.11) entrusted by Logos Società Cooperativa (project leader), CNA Catania and Cosmopolis Società Cooperativa. (*) Assistant Professor in Business Management, University of Palermo (Italy), Faculty of Political Sciences, Master Phil. in System Dynamics, University of Bergen (Norway), CED4 System Dynamics Group, enzobivona@sciepol.unipa.it, http://www.ced4.it/ (**) Assistant Professor in Work and Organisational Psychology, University of Palermo, PhD in Work and Organisational Psychology, University of Bologna (Italy), Master in Managing business growth through System Dynamics and Accounting Models, University of Palermo, CED4 System Dynamics Group fceresia@libero.it, http://www.ced4.it/ - Corresponding author (***) PhD in Business Management, University of Palermo (Italy), Faculty of Business Management, CED4 – System Dynamics Group giannimonte@hotmail.com, http://www.ced4.it/