The Volume of Payments and the Informal Economy in the Netherlands, 1965

This study provides an estimate of the size of the informal economy in the Nether­ lands in the period 1965-1982. In this study the informal economy has been defined statistically as that part of the non-registered national product which involves monet­ ary transactions. Bartering activities and transactions outside the market are thus left completely out of consideration. The same is true of those market transactions which, despite their illegal or underground nature, are already included in the national pro­ duct published by the Central Bureau of Statistics (CBS) because of its measuring methods. According to the CBS (1983a) these transactions account for 5 to 10% of national income. This means that the estimate of the informal economy will be smal­ ler when the statistical registration is more comprehensive and a wider starting point is chosen than the market. The term underground economy as used in a fiscal context therefore means something else than the statistical term informal economy used in this study I. The phenomenon of the informal economy emanates partly from the usual measuring conventions; at the same time it is also an expression of economic behav­ iour motivated by economic incentives and conditions which aims to keep such econ­ omic dealing concealed. This study attempts to quantifY the size of that informal economy partly on the basis of economic behaviour. Observable monetary trans­ actions were the main starting point.