Analisys of the Shadow Economy in the Wood Industry

Author

Jože Kocjancic and Stefan Bojnec
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from  University of Primorska, Faculty of Management Koper

Abstract: This paper investigates the impact of the reduction in the number and size structure of large enterprises in the wood industry on the dynamics of the shadow economy in the wood industry in Slovenia. The empirical results show that the dynamics in the reduction of the number and size structure of large enterprises in the wood industry significantly contributes on the increasing share of the shadow economy in the wood industry. The most important decision factors to participate in the shadow economy are the level of taxes and contributions, opportunities for better earnings and tax regulations. The estimated share of the shadow economy in the wood industry is 21.7%. As the basic solutions to reduce the share of the shadow economy and to speed up the dynamics of the entering of small enterprises in the wood industry are improved regulation system to provide better incentives to operate within the formal sector and better access for necessary financial capital at acceptable guarantees. As important are also good practices by the state institutions by providing incentives for entrepreneurship and encouraging decisions for the setting up of an enterprise.

Keywords: Shadow economy; firm dynamics; wood industry; Slovenia. (search for similar items in EconPapers)
Date: 2011
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http://www.fm-kp.si/zalozba/ISBN/978-961-266-113-7.pdf Conference Programme with Abstracts (application/pdf)

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Persistent link: http://EconPapers.repec.org/RePEc:mgt:micp11:389-403

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