The shadow economy in Poland under economic slowdown: Shock absorber or troublemaker?
Shadow economy seems to be a widespread phenomenon in contemporary economic systems. Economists and market analysts try to capture its size and analyze its implications for the functioning of the economy at large. The paper will be focused on the analysis of Poland’s shadow economy under economic slowdown and its implications for the country’s economy and Polish society. The basic objective of the paper will be to provide an empirical insight and shed some light on informal sector in Poland. The author is going to analyze “pros” and “cons”, e.g. positive and negative aspects of the shadow economy. On the one hand, informal economic activity often involves infringement of law and considerable social and economic costs. On the other hand, it has the effect of boosting production, stimulating consumer demand and — last, not least — providing income for jobless people and supplementing wages of official sector employees, thus helping to raise consumers’ and households’ living standards. A full analysis of the shadow economy must therefore take into account both the adverse and the beneficial consequences, at the macro- and microeconomic level, and cannot ignore its social and psychological implications.
Data/methods
The intention of the author is to characterize various forms and manifestations of the shadow economy in Poland under the circumstances of economic slowdown using diverse data sources. The author would like to draw upon the latest available research findings on the subject including the results of the comprehensive nation-wide survey on unregistered work in Poland conducted by Polish Central Statistical Office in 2010. The official GUS data will be accompanied by findings of the author’s own questionnaire research conducted in 2011 and 2013 focused on informal labour market and brand piracy.
Expected results
The author would like to highlight some trade-offs and economic policy dilemmas related to the functioning of the shadow economy in Poland and formulate some policy recommendations. On the one hand the expansion of different forms of informal economy represents a big growth challenge for the official sector (e.g. the erosion of revenues of the Treasury) on the other - shadow economy proves to be a kind of a shock absorber and “social mollifier” enabling smoother functioning of Poland’s economy during economic slowdown.
JEL codes: H0, H26, O17.