Contact Us

If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.

Please fill out the contact form below and we will reply as soon as possible.

  • Course Subjects
  • Tutoring
  • Home
  • Economics, Finance, & Analytics
  • Economic Analysis & Monetary Policy

Underground Economy - Explained

What is an Underground Economy?

Written by Jason Gordon

Updated at May 3rd, 2023

Contact Us

If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.

Please fill out the contact form below and we will reply as soon as possible.

  • Marketing, Advertising, Sales & PR
    Principles of Marketing Sales Advertising Public Relations SEO, Social Media, Direct Marketing
  • Accounting, Taxation, and Reporting
    Managerial & Financial Accounting & Reporting Business Taxation
  • Professionalism & Career Development
  • Law, Transactions, & Risk Management
    Government, Legal System, Administrative Law, & Constitutional Law Legal Disputes - Civil & Criminal Law Agency Law HR, Employment, Labor, & Discrimination Business Entities, Corporate Governance & Ownership Business Transactions, Antitrust, & Securities Law Real Estate, Personal, & Intellectual Property Commercial Law: Contract, Payments, Security Interests, & Bankruptcy Consumer Protection Insurance & Risk Management Immigration Law Environmental Protection Law Inheritance, Estates, and Trusts
  • Business Management & Operations
    Operations, Project, & Supply Chain Management Strategy, Entrepreneurship, & Innovation Business Ethics & Social Responsibility Global Business, International Law & Relations Business Communications & Negotiation Management, Leadership, & Organizational Behavior
  • Economics, Finance, & Analytics
    Economic Analysis & Monetary Policy Research, Quantitative Analysis, & Decision Science Investments, Trading, and Financial Markets Banking, Lending, and Credit Industry Business Finance, Personal Finance, and Valuation Principles
  • Courses
+ More

What is an Underground Economy?

An underground economy, also known as a black market or informal economy, is an economy consisting of transactions that are not recorded, monitored, or regulated by the government or other regulatory authority. 

Activities within an underground economy are often illegal or prohibited by law. Illicit trades, drug trades, illegal procurement of arms, human trafficking, exchange of stolen items, illegal prostitution and others are underground economy. 

Back to:ECONOMIC ANALYSIS & MONETARY POLICY

How does an Underground Economy Work?

Here are the major points to know about the underground economy;

  • Illicit trade transactions, illegal markets, black markets all form the underground economy.
  • The underground economy is one in which transactions are carried out without the involvement of the government.
  • Trades in this market are untaxed and unregistered.

Measuring the Underground Economy

The underground economy is not included in the annual statistical reports of GDP reports of a country's economy. 

Economists attempt to estimate the size of underground economies by informal sampling of consumers regarding money spent. 

Related Topics

  • Economics
  • Scarcity in Economics 
  • Division of Labor
  • Microeconomics
  • Macroeconomics
  • Theory and Models 
  • Traditional Economy
  • Command Economy
  • Centrally Planned Economy
  • Market Economy
  • Free Market Economy
  • Collaborative Economy
  • Private Enterprise
  • Mixed Economy
  • Underground Economy
  • Black Economy
  • Government Market Regulation
  • Capitalism
  • Conscious Capitalism
  • Communism
  • Centrally Planned Economy
  • Socialism
  • Marxism
  • Egalitarianism
  • Plutocracy
  • Neoliberalism
  • Underground Economy
  • Black Economy
  • Globalization
  • Imports and Exports
  • Gross Domestic Product
  • Fiscal Policy
  • Social Economics
  • Positive Economics
  • Mathematical Economics
  • Constitutional Economics
  • Labor Economics
  • Organizational Economics
  • Development Economics
  • Behavioral Economics
  • Environmental Economics
  • Evolutionary Economics
  • True-Cost Economics
  • Managerical Economics
  • Experimental Economics
  • Welfare Economics
  • American Economic Association
underground economy blackmarket

Was this article helpful?

Yes
No

Related Articles

  • U-Shaped Recovery - Explained
  • Numismatics - Explained
  • Time Preference Theory of Interest - Explained
  • Pareto Efficiency - Explained



©2011-2023. The Business Professor, LLC.
  • Privacy

  • Questions

Definition by Author

0
0
Expand