First, what this is not. It is tempting to call this the black market, and the people who
compile it explicitly do not. The estimate uses the narrow definition: all market-based legal
production of goods and services deliberately concealed from the authorities, for tax reasons. Cash paid
to a builder. A waiter's tips. A second job nobody declares. Drug dealing, smuggling, trafficking and
trade in stolen goods sit in the broader definition and are excluded from every number on this
page. What you are looking at is ordinary work that the state cannot see.
The two charts rank the same countries in almost opposite order. By share, the list is led
by Greece at 20.9 percent and Italy at 20.3, and the United States finishes second from last at 6.1
percent, ahead only of Switzerland. Read that way, America has one of the most visible economies in the
developed world.
By amount, it is not close. Six point one percent of the American economy is about $1.59
trillion. That single figure is larger than the entire output of Spain, and roughly three and a
half times the whole unreported economy of Italy, the country with a share more than three times as
large. Across these 22 economies the total comes to about $4.7 trillion, a blended 8.7 percent.
Why both readings are true. A percentage answers a question about institutions: how much
of this society's activity escapes its own tax system. An amount answers a question about the world: how
much economic activity is actually going unrecorded. A small share of a very large economy beats a large
share of a small one, every time, and which number is the right one depends entirely on what you were
asking.
The scarcinality reading. This is a measurement page, and it belongs with the others on
this site for the same reason. The activity is real. The work is done, the money changes hands, the goods
exist. What is missing is the record. Treating unrecorded output as absent output is the same error as
treating a counterfeit shortage as a real one, and it runs through tax policy, productivity statistics and
GDP comparisons alike. Two countries with identical real economies will look different if one of them
writes more of it down.
How much to trust these numbers. Less than their decimal places suggest. They come from a MIMIC
model, which infers a hidden quantity from observable causes like tax burden and regulation and from
indicators like cash use and labour participation. The authors state plainly that the procedure yields
only relative values, and that converting them into absolute ones requires separate calibration
by other methods. Every 2022 figure here is a projection rather than a measurement. Competing approaches
produce materially different answers for the same country, and the ranking is sturdier than any single
value in it. Arguments welcome.