Black Markets

Shadow Economy Keeps Greece Afloat

People working off-the-books jobs don't starve or protest


BERLIN taxi-drivers tend to argue that if all Greeks paid their taxes the euro zone would be in less of a pickle. But that line of thought may be wrong. Greece's shadow economy—the activities of those who pay neither tax nor social insurance—seems to be something of a safety-net preventing the country from going into free-fall.

Friedrich Schneider, a professor at the Johannes Kepler University in Linz, Austria, has been assessing shadow economies for years. He reckons that much of Greece's shadow economy, perhaps as much as half, actually complements activities in the official economy, adding to welfare and overall GDP. Stamping it out altogether might do more harm than good.