engleski

The Shadow Economy in Croatia

The shadow economy is a global phenomenon, regardless of the state of development of the country. However, the volume differs from country to country. Although there are different definitions of the shadow economy, it can be considered as unregistered economic activities that would contribute to the officially accounted gross national product if these activities were recorded. The paper presents the results of past papers that examine the causes and effects of the shadow economy, which they show that a strong presence of the shadow economy has been identified in Croatia, whose volume of shadow economy often tops charts in the European Union. According to some research estimates, it is calculated that the shadow economy comprises around a quarter of GDP and more. The main goal of this research is to examine the connection between the shadow economy and employment, unemployment, employee earnings and economic performance in Croatia. Correlation and multiple regression analysis were used to estimate the correlation of the mentioned variables and the shadow economy. Constrained by the availability of comparable data, the analysis covered the period from 2000 to 2019. The missing data in the panel were imputed using Fully Conditional Specification, where each incomplete variable is imputed by a separate model. Results unexpectedly showed that the growth of the shadow economy in Croatia is related to the growth of wages and GDP per capita, which can be explained by the negative migration balance in Croatia.It was determined that less workload of workers during the working week is associated with a higher level of the shadow economy.The expected increase in the shadow economy is associated with a decline in GDP growth.The result is indicative that a higher number of working hours in a working week is associated with lower gross and net wages and GDP per capita. The increase in employment is related to the lower level of the shadow economy, but also a higher share of the unemployed in the total population leads to a reduction in the shadow economy.

shadow economy ; employment ; unemployment ; Croatia ; wages ; growth

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