Rakhmonov Azizjon,
Senior lecturer of the Department of Finance, KIMYO International University in Tashkent,
Tashkent, Uzbekistan
ORCID: 0000-0001-6734-9504
Abstract. The article researches the scientific and theoretical literature on the impact of the scale of the underground economy on the economy, based on which the long-term and short-term effects of the underground economy on the level of economic growth and employment were modeled. In order to empirically assess the impact of the level of the secret economy on the level of economic growth and employment, an econometric analysis covering the years 2004-2015 was conducted for 44 countries. The results of the analysis revealed that the hidden economy has a negative impact on economic growth in the short and long term. Also, the analysis revealed that there is a short-term negative relationship between the underground economy and the unemployment rate. It was found that the informal sector serves to absorb unemployment caused by external shocks in the short term, but has a negative impact on the welfare of the population in the long term.
Key words: Shadow economy, economic growth, unemployment, employment, empirical analysis, tax evasion.