| dc.description.abstract | Abstract:
The seminal paper by Pissarides and Weber (1989) is one of several previous studies trying to
measure the size of the black economy. Pissarides and Weber compared the relationship between
food expenditure and income in two groups of workers, self-employed and employees in
employment, assuming that employees reported income correctly. For a given level of reported
income, the self-employed had a higher food expenditure than employees. Pissarides and Weber
concluded that self-employed's actual income was 1.55 times reported income, and that this part of
the black economy was about 5.5 percent of GDP in the UK in 1982.
Presumably due to a too informal argumentation, Pissarides and Weber's estimators are not entirely
correct and alternative estimators have been overlooked. In all, I suggest three different interval
estimators for mean under-reporting. The first is obtained by formally solving optimization problems
which Pissarides and Weber tried to solve informally. The other two follows from recognizing, and
incorporating, parameter restrictions which were not fully appreciated.
Keywords: Self-Employment, Under-Reporting of Income, Household Consumption, Black
Economy, Informal Sector. | no_NO |
