Corneliu Sorin BAICU, Cristian Valentin HAPENCIUC


Research in recent decades has shown that an analysis of underground economy from the limiting perspective of economic factors of influence is insufficient. Through an integrative approach it is opened the way to a multidisciplinary and multi causal understanding of all factors (economic, noneconomic, quasi economic) that influence the phenomenon of underground economy. The present work pleads for the analysis of the concept underground economy (multidimensional and composite) through the instruments of study: the choices, institutions and direct democracy. The model of choices express the decision of labor force to activate on the official labor market or to the illegal labor market in the context given by opportunities, preferences and constraints. Institutions defines the capacity of regulation  and implementation of government policies with implications in stimulating or discouraging economic subjects to hide activities in the sphere of underground economy. Direct democracy through its institutions (referendums, legislative initiatives) provides the political framework for the active involvement of the taxpayer as a voter or elector to a healthy and sustainable economic development. The results of active involvement of citizens consist in a more effective implementation of strategies and tax policies and a reduction of  incentives to escape in the sphere of economic informality.



direct democracy; informal sector; institutions; underground economy; model choice of labor force


Alesina, A., Devleeschauwer, A., Easterly, W., Kurlat, S., Wacziarg, R. (2003) Fractionalization. Journal of Economic Growth, 8, pp. 155–194.

Angelescu, C., Ciucur, D., Dinu, M. (2001), Dicționar de Economie, București, Editura Economică, p.183;

Aragonès, E., Sánchez-Pagés, S. (2009) A theory of participatory democracy based on the real case of Porto Allegre, European Economic Review, 53 (1), pp. 56-72.

Aruoba, S. B. (2010) Informal Sector, Government Policy and Institutions, 2010 Meeting Papers 324, Society for Economic Dynamics,, accesed October 12, 2015.

Baicu, C.S. (2014) Anatomy of underground economy in a dichotomous perspective formal-informal, Emerging Markets Economics and Business. Contributions of Young Researchers. Proceedings of the 5th Conference of Doctoral Students in Economic Sciences, Oradea University Press No.2 , December 2014, pp. 30-37.

Baicu, C.S., Hapenciuc, C.V. (2015) The underground economy from the perspective of the triad economics, sociology, psychology, The USV Annals of Economics and Public Administration Volume 15, Special Issue, 2015, Editura Universităţii “Ştefan cel Mare” din Suceava, pp. 45-54.

Dell’Anno, R., Teobaldelli, D. (2012) Keeping both corruption and the shadow economy in check: the role of decentralization. Working Papers Series in Economics, Mathematics and Statistics WP-EMS 2012/13.

De Soto, H. (2001) The Mystery of Capital. Why Capitalism Triumphs in the West and Fails Everywhere, A Black Swan edition published 2001, Reading, Berkshire, https://yendieu. files., accessed September 19, 2015.

Enste, D., H. (2015) The shadow economy in industrial countries, IZA World of Labor 2015: 127,, accessed July, 20, 2015.

Fiorino, N., Ricciuti, R. (2007) Determinants of direct democracy, CESifo Working Paper No. 2035, June 2007,, accessed September, 15, 2015.

Friedman, E., Johnson, S., Kaufmann, D., Zoido-Lobaton, P. (2000) Dodging the Grabbing Hand: the Determinants of Unofficial Activity in 69 Countries, Journal of Public Economics, Vol. 76, pp. 459–493.

Isachsen, A. J., Steinar S., (1980) The Hidden Economy: The Labor Market and Tax Evasion, Scandinavian Journal of Economics, Vol 82, 2, pp. 304-311.

Persson, T., Tabellini, G. (2002) THE ECONOMIC EFFECTS OF CONSTITUTIONS What do the data say?, 26Tabellini 2003.pdf, accessed September, 15, 2015.

Rivera-Batiz, F. L. (2002), Democracy, Governance, and Economic Growth: Theory and Evidence, Review of Development Economics, 6 (2), pp. 225-247.

Schneider, F., (2010) The Influence of Public Institutions on the Shadow Economy: An Empirical Investigation for OECD Countries, members/ Schneider/files /publications/2011/RLE _Influence_PublicInstitutions_ShadEc.pdf, accessed, October 12, 2015.

Schneider, F., Enste, D. H. (2013) The Shadow Economy. An International Survey, Cambridge: Cambridge University Press., pp. 81-86

Singh, A., Jain-Chandra, S., Mohommad, A. ( 2012) Inclusive Growth, Institutions , and the Underground Economy, IMF Working Paper Asia and Pacific Department,, accessed May 14, 2015.

Stiglitz, J. E., Walsh, C. E. ( 2005) Economie, Editura Economică, București, pp.33-36; 191-193.

Teobaldelli, D., Schneider, F. (2013) The Influence of Direct Democracy on the Shadow Economy, Public Choice, December 2013, Volume 157, Issue 3-4, pp 543-567.

The Heritage Foundation in partnership with Wall Street Journal (2015) 2015 index of economic freedom, /download, accessed August 17, 2015.

Full Text: PDF

Creative Commons License
This work is licensed under a Creative Commons Attribution 3.0 License.