Shadow Economy

The shadow economy refers to economic activities that occur outside official government regulation and taxation. This includes informal jobs, unregistered businesses, and transactions that aren’t reported to authorities. While these activities can provide income and employment, they also evade taxes and labor laws, leading to potential risks for workers and reduced government revenue. The shadow economy can thrive in areas with high regulation or taxation, as people seek alternatives to meet their needs without official oversight. Understanding it highlights the balance between economic freedom and the need for regulation.