What 45 Years of Data Tells Us About Globalization’s Influence on the Shadow Economy

The shadow sector, or informal economy, includes everything from illicit sidewalk sales of counterfeit handbags to large corporations that evade taxes and ignore regulations. It makes up a substantial portion of the global economy. The OECD estimated in 2009 that 1.8 billion workers participated in this sector, generating over $10 trillion in goods and services. Indeed, in many countries the number of people employed informally exceeds the number in the formal workplace.