Shadow economy in a
turbulent environment: evidence
Warsaw School of Economics, Warsaw, Poland
Purpose –The purpose of this paper is to provide an empirical insight into the functioning of the informal sector
in Poland and highlight the reasons for involvement of economic agents in the new forms of the shadow economy.
Design/methodology/approach –The paper is focused on the analysis of different manifestations of
unregistered economic activities in Poland. The author draws upon the latest available research ﬁndings on the
subject including shadow economy estimates. Finally, the case study analysis of the tobacco industry in Poland
has been used to exemplify and highlight the driving forces conducive to theexpansion of the informal sector.
Findings –The informal sector’s share of the Polish economy in the years 2010-2015was put as ranging
between 12.1per cent gross domestic product (GDP) and 14.5 per cent GDP (with the peak in 2013)by the GUS
(Polish Main Statistical Ofﬁce),between 19.2 per cent GDP and 21.1 per cent GDP by the IBnGR think tank
(peak in 2012)and between 23.3 per cent and 25.4 per cent GDPby Professor F. Schneider.
Research limitations/implications –The case study of the tobacco industry, although well illustrates
the dynamics of the shadow economy,does not provide a comprehensive picture of the Poland’s informal sector.
Practical implications –The paper providestips and recommendations aimed at reducingthe size of the
Social implications –Reducing the size of the informal sector could strengthenthe social integrity and
Originality/value –The paper providesinsight into new areas and manifestations of the shadoweconomy
in Poland exempliﬁedby the case study of the tobacco industry.
Keywords Poland, Tax evasion, Shadow economy, Undeclared work, Tax avoidance,
Informal labour market
Paper type Research paper
The shadow economy, presentwith varying intensity in many countries across the globe, is
estimated by experts to rank as the world’s second largest economy, after the USA. With a
combined employment of 1.8 billion,it produces US$10 trillion worth of goods and services,
or 16 per cent of the global GDP, thus reducing global tax revenues by at least $2 billion
These ﬁgures highlight the magnitude of the problems posed by the existence and
expansion of the shadow economy, which is also referred to as unofﬁcial, informal or non-
observed. Not only does it challenge the ethical norms, it also generates huge losses for
many national budgets and distorts competition in modern economies, functioning as they
are in an unstable, frenzied environment. This, too, is patently true of the Polish economy
which –having joined the EU –is now more strongly integrated with Europe,but which is
JEL classiﬁcation –H0, H26, O17
Journalof Money Laundering
Vol.21 No. 3, 2018
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