The Hidden Enterprise Culture
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The Hidden Enterprise Culture

Entrepreneurship in the Underground Economy

Colin C. Williams

Portraying how entrepreneurs often start out conducting some or all of their trade on an ‘off-the-books’ basis and how many continue to do so once they become established, this book provides the first detailed account of the vast and ubiquitous hidden enterprise culture existing in the interstices of western economies. Until now, the role of the underground economy in enterprise creation, entrepreneurship and small business development has been largely ignored despite its widespread prevalence and importance.
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Chapter 4: Estimating the Size and Growth of Underground Enterprise

Colin C. Williams


INTRODUCTION Next time you receive your payslip, look at how much tax you have paid. If you work solely as an employee and have your tax withheld on a ‘pay as you earn’ basis, you are probably picking up part of the tab that others should be paying. But how much more tax are you paying because others do not? And is the amount growing or reducing over time? This chapter attempts to answer these questions by reviewing what is known about the magnitude of the underground economy and whether or not it is growing. Both for those exploring the underground sector for the first time, as well as for more seasoned investigators, there is often a deep scepticism about whether it is possible to measure what is by its very nature a hidden phenomenon. Indeed, and as Table 4.1 displays, this scepticism appears at first glance justified. In all nations, vast variations exist in the estimates of its magnitude. In the UK, for example, they range from 1 to 34 per cent of GDP and in the USA from 5 to 28 per cent. To understand these startling variations, this chapter evaluates the array of measurement methods that have produced these estimates. These range from indirect to direct techniques. At one end of the spectrum, that is, and for those assuming that research participants will not be forthcoming about whether or not they engage in underground work, evidence is sought indirectly in macroeconomic data collected and/or constructed for...

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