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Measuring the Informal Economy: Estimation Methods and Policy Implications

This report discusses how countries estimate the size of the informal economy and its impact on social protection, growth, tax revenues, and public trust. It also introduces a survey of national practices to measure the implicit adjustments in the informal economy.

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Measuring the Informal Economy: Estimation Methods and Policy Implications

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  1. Measuring the Informal EconomyOECD Working Party on National AccountsParis, October 2011 Contact: nadim.ahmad@oecd.org

  2. The Informal Economy • Frequently asked questions to OECD NA – How do countries estimate the size of the informal economy? How big is it? • For which we generally have little detailed information. • Increasingly the question is being posed by policy makers. Statistics Directorate

  3. The Informal Economy – WP1 • March 2011 WP1 meeting called for a study to be undertaken by STD to respond to needs in a number of policy areas: • Social protection and insurance • Growth and productivity • Tax revenues (erosion) • Trust and Integrity in public institutions • GDP comparability Statistics Directorate

  4. CSTAT 2011 • Delegates were asked to support the development of a survey of national practices based on the Eurostat Tabular approach for production. • With Sectors also broken down by size classes Statistics Directorate

  5. The Survey • Some countries have responded saying that they do not produce explicit estimates of the NOE. • The purpose of the survey is to attempt to get some measure of these implicit adjustments. • The focus for WP1 will be on Types N1 and N6 – which correspond to underground production • (typically tax-evasive but also ‘regulatory-evasive’) Statistics Directorate

  6. N1 to N7 explained All economic activities of all producers

  7. The Survey • Goes further than the conventional Tabular approach, in that it also asks for size-class breakdowns. • Understanding the nature of sectors, particularly those that have high proportions of micro-enterprises are particularly important. • Important to note that the size-class breakdown in the survey is suggestive. Countries are encouraged to provide whatever breakdowns possible. Statistics Directorate

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