How the Shadow Economy Impacts the Quality of Life in Regions

Abstract

The article presents the findings of research on how the shadow economy and the quality of life ofpopulation are interrelated. We propose a hypothesis that we can evaluate the shadow economy at the regional level basing on the dynamics of the quality of life indicators. The impact that the shadow economy has on the quality of life is proved by a regression analysis of its indicators and Human Development Index values for countries worldwide. To study the shadow economy at the regional level, we have identified the quality of life indicators that reflect regional differences and are affected by the shadow economy. Having compared the dynamics of the standard of living and quality of life indicators in the Siberian Federal District for the period between 2001 and 2013, we managed to get an insight into the level of the shadow economy. In regions where growth in the standard of living corresponds to growth in the quality of life, the level of the shadow economy is below average; on the contrary, in regions where growth in the standard of living exceeds growth in the quality of life, the level of the shadow economy is above average.