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Table 1 gives a better view of what a reasonable definition of underground economy includes.
Underground economic activities are all illegal actions that fit the characteristics of classical crime transactions like burglary, robbery, drug dealing, etc.
Informal household economy consists of household enterprises that
(1) are small in terms of persons engaged, and
(2) are not registered officially under various specific forms of national legislation.
2. Why is there a shadow economy?
The growth of the underground economy is associated with various factors, such as rise in taxes and social security burdens, intensity of regulations in the official economy, especially the labour markets including forced reduction of weekly working time, early retirement, prohibition of not working at more than one office for government officials etc...
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