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Underground Economies: Human Trafficking an Application

Underground Economies: Human Trafficking an Application. Topics. Definition and variations Accounting for size Problems posed Factors for development An application: Human trafficking. Definition. Includes all economic activities that are not registered It’s flexible

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Underground Economies: Human Trafficking an Application

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  1. Underground Economies:Human Trafficking an Application

  2. Topics • Definition and variations • Accounting for size • Problems posed • Factors for development • An application: Human trafficking

  3. Definition • Includes all economic activities that are not registered • It’s flexible • “Informal” v. “Underground” v. “Criminal” • Legal v. Illegal • “Criminal” debate

  4. Definition • 4 Categories: • Activities yielding income that’s not reported • Productions that violates one or more mandates • Productive activity transfer beneficiaries who draw Soc. Security or public assistance • Productive activity by illegal aliens From Hans F. Senholz. “The Underground Economy”

  5. Determining Extent • Methods: -Direct approach: interview, tax audit -Indirect approach: Currency demand, Household electricity model -Soft model approach: cross-section and time series analysis

  6. A State in Transition • Weakened government due to collapse of Soviet Union • Post perestroika instability • Organized crime accounting for an estimated 40% of Russia’s GDP

  7. Human Trafficking • “Criminal Economy” -based on breaking fundamental laws

  8. Economic Factors • Humans as a commodity • Unpaid labor • Untaxed income • Globalization as a means of increase • Out migration of potential workers

  9. Accounting • Criminal Economy in the underground is the most difficult to account for • Methods used to estimate extent • Open interviews

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