Introduction

This chapter provides the various consequences that come from a large and growing underground economy. Public discussions of illicit work, tax evasion and all other activities in the underground economy have grown increasingly overtime. In a number of countries, initiatives to tackle the underground economy have been implemented highlighting the fact that in recent years politicians have felt the need to act as well. A growing underground economy can be seen as the reaction of individuals who feel overburdened by the state and who choose the 'exit option' rather than the 'voice option' to express their dissatisfaction. Whenever participation in the underground economy expands, tax revenue losses add to the financial pressures of government to satisfy the service needs of the community. By its very nature, the underground economy promotes unfair price competition. The chapter also presents an overview of the key concepts discussed in this book.