A Consumer Expenditure Approach to Estimating the Size of the Underground Economy

Abstract

This research was designed to reveal the magnitude of consumer use of informal suppliers, in order to determine the level of unmeasured or “underground” economic activity in the U.S. economy. The results of this study are based on a national probability sample of households which reported their purchases across 15 broad categories of goods and services. The authors conclude that consumers' use of suppliers in the underground economy accounts for a very minor portion of consumer expenditures.