Legal Definitions - shadow economy

Definition: The shadow economy refers to all the economic activities that are not registered or reported to the government, but still contribute to a country's gross national product. This includes legal and illegal activities such as gambling, prostitution, drug dealing, barter transactions, and unreported incomes.

Examples: The shadow economy can include a variety of activities, such as:

• A person who works a job and gets paid under the table, without paying taxes or reporting their income to the government.
• A street vendor who sells goods without a permit or license.
• A drug dealer who sells illegal substances for cash.
• A prostitute who offers services for money.
• A gambler who participates in illegal betting or gambling activities.

These examples illustrate how the shadow economy can involve both legal and illegal activities that are not reported to the government. While some of these activities may be harmless or even beneficial to society, others can have negative consequences such as contributing to crime or tax evasion.