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Population in the shadow market: petty corruption and unpaid taxes

Author

Listed:
  • Gennady Vasilievich Osipov

    (Institute of Socio-Political Research under the Russian Academy of Sciences, Russian Federation)

  • Vladimir Ivanovich Glotov

    (National Research Nuclear University, Russian Federation)

  • Svetlana Gennadievna Karepova

    (Institute of Socio-Political Research under the Russian Academy of Sciences, Russian Federation)

Abstract

The subject matter of the article is a problem that is relevant for developing economies. A legal foundation for economy operation development is consolidated slowly; instead, an illegal flow of money and corruption the population gets actively involved into are expanding. According to official records, the number of unaccounted employees who avoid taxation has exceeded 15 million in Russia. When studying this phenomenon, researchers mainly refer to shadow economy whose scale and financial damage inflicted on the country are known. Population masses involved in the illegal flow of money operate in the shadows, since the latency of corruption processes makes it difficult to explore this phenomenon and invokes sociological methods along with economic methods. The purpose of the article is to show the structure of Russian population’s involvement in the illegal cash flow turnover in terms of three aspects: presence in the shadow economy, involvement in corrupt practices, and concealment of a fraction of income aiming to non-payment of taxes. When solving these problems, the authors were to use the method of applied sociology with a subsequent transformation of aggregated information into empirical indicators by economic methods. Based on the research, the authors have explored the structure and motivation of the population to participate in the illegal flow of money, calculated the aggregate economic damage from all types of population incomes that are not undocumented by revenue authorities. By revealing the latent structure of the illegal cash flow, the research findings enable to more accurately plan priority directions of efforts to be made by fiscal bodies to neutralize the population participation in illegal economic and financial activities.

Suggested Citation

  • Gennady Vasilievich Osipov & Vladimir Ivanovich Glotov & Svetlana Gennadievna Karepova, 2018. "Population in the shadow market: petty corruption and unpaid taxes," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 6(2), pages 692-710, December.
  • Handle: RePEc:ssi:jouesi:v:6:y:2018:i:2:p:692-710
    DOI: 10.9770/jesi.2018.6.2(16)
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    References listed on IDEAS

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    Cited by:

    1. Irina I. Frolova & Olga Yurievna Voronkova & Natalia Andreevna Alekhina & Irina Kovaleva & Natalia A. Prodanova & Liudmila V. Kashirskaya, 2019. "Corruption as an obstacle to sustainable development: A regional example," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 7(1), pages 674-689, September.
    2. Jarmila SEBESTOVA & Ingrid MAJEROVA & Irena SZAROWSKA, 2018. "Indicators For Assessing The Financial Condition And Municipality Management," REVISTA ADMINISTRATIE SI MANAGEMENT PUBLIC, Faculty of Administration and Public Management, Academy of Economic Studies, Bucharest, Romania, vol. 2018(31), pages 97-110, December.
    3. Armenia ANDRONICEANU & Manuela TVARONAVICIENE, 2019. "Developing A Holistic System For Social Assistance Services Based On Effective And Sustainable Partnerships," REVISTA ADMINISTRATIE SI MANAGEMENT PUBLIC, Faculty of Administration and Public Management, Academy of Economic Studies, Bucharest, Romania, vol. 2019(33), pages 103-118, December.
    4. Zolkover Andrii & Kovalenko Dmytro, 2020. "Evolution of theories of shadow economy formation," Technology audit and production reserves, Socionet;Technology audit and production reserves, vol. 6(4(56)), pages 6-10.
    5. Armenia ANDRONICEANU & Rodica GHERGHINA & Marilena CIOBANA?U, 2019. "The Interdependence Between Fiscal Public Policies And Tax Evasion," REVISTA ADMINISTRATIE SI MANAGEMENT PUBLIC, Faculty of Administration and Public Management, Academy of Economic Studies, Bucharest, Romania, vol. 2019(32), pages 32-41, June.

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    More about this item

    Keywords

    corruption; shadow market; public services; bribe; public opinion;
    All these keywords.

    JEL classification:

    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • G40 - Financial Economics - - Behavioral Finance - - - General
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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