Evaluation of the impact of shadow economy determinants: Ukrainian case

Abstract

This article is aimed at evaluation of the impact of shadow economy determinants on the scope of shadow economy in Ukraine over 2005 – 2012. The empirical research has revealed that 99 percent of shadow economy in Ukraine is explained by such determinants as tax rate, overall employment rate, import of goods and services, GDP and participation of working-age people in the labour market. The growth of the overall employment rate has a bidirectional impact on the scope of shadow economy in Ukraine: hired work increases the opportunities to earn legal wages, but probability of paying illegal wages is still high.