<abstract xmlns="http://www.w3.org/1999/xhtml">

<p>This paper explores the impact of refugees on the size of the underground economy in 28 European Union countries over the period from 1998 to 2017. It applies a nonlinear methodology by employing dynamic panel threshold estimations. The main findings uncover a nonlinear connection between refugees and the informal economy with an inverted V-shape and a different magnitude of effects depending on the share of the refugee population. The underground economy is stimulated at a low level of refugee inflows (where immigrants make up &lt;0.572% of the total population). Large inflows compress the underground economy, which increases competition in the labor market based on lower labor costs. Economic growth and international trade play a crucial role in reducing the size of the informal economy. Equally importantly, coherent unemployment policy and adequate regulation of illegal immigrants support this process.</p>
</abstract>

This paper explores the impact of refugees on the size of the underground economy in 28 European Union countries over the period from 1998 to 2017. It applies a nonlinear methodology by employing dynamic panel threshold estimations. The main findings uncover a nonlinear connection between refugees and the informal economy with an inverted V-shape and a different magnitude of effects depending on the share of the refugee population. The underground economy is stimulated at a low level of refugee inflows (where immigrants make up <0.572% of the total population). Large inflows compress the underground economy, which increases competition in the labor market based on lower labor costs. Economic growth and international trade play a crucial role in reducing the size of the informal economy. Equally importantly, coherent unemployment policy and adequate regulation of illegal immigrants support this process.

The role of refugees in the underground economy of the European Union

Zeppelin Chair of International and Digital Economics

Department of Finance, Faculty of Economics and Business Administration

Laboratoire d’Economie d’Orléans (LEO), UMR7322, Faculté de Droit d’Economie et de Gestion

IZA Journal of Development and Migration

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

{"article-title":"The role of refugees in the underground economy of the European Union"}

This paper explores the impact of refugees on the size of the underground economy in 28 European Union countries over the period from 1998 to 2017. It applies...

The role of refugees in the underground economy of the European Union

Data publikacji: 13 mar 2022

Zakres stron: -

Przyjęty: 11 lut 2022

DOI: https://doi.org/10.2478/izajodm-2022-0002

Słowa kluczowe
refugees, underground economy, implications, European Union

© 2022 Mihai Mutascu et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

The role of refugees in the underground economy of the European Union

Data publikacji: 13 mar 2022

Zakres stron: -

Przyjęty: 11 lut 2022

DOI: https://doi.org/10.2478/izajodm-2022-0002

Słowa kluczowerefugees, underground economy, implications, European Union

© 2022 Mihai Mutascu et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Słowa kluczowe
refugees, underground economy, implications, European Union