underground economy

The underground economy refers to economic activities that occur outside the official, regulated financial system. These include unreported jobs, cash payments, and transactions that vendors or individuals intentionally avoid taxes or regulations. While they often provide short-term benefits like extra income or lower costs, they can undermine government revenue and economic transparency. Examples include informal work like babysitting without receipts or illegal activities. Economists analyze this sector to understand its impact on the overall economy and government policies.