Transcript Underground Economies: Human Trafficking an Application

Underground Economies:
Human Trafficking an Application
Topics
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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
• “Informal” v. “Underground” v. “Criminal”
• Legal v. Illegal
– “Criminal” debate
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”
Determining Extent
• Methods:
-Direct approach: interview, tax audit
-Indirect approach: Currency demand,
Household electricity model
-Soft model approach: cross-section and
time series analysis
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
Human Trafficking
• “Criminal Economy” -based on breaking
fundamental laws
Economic Factors
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Humans as a commodity
Unpaid labor
Untaxed income
Globalization as a means of increase
Out migration of potential workers
Accounting
• Criminal Economy in the underground is
the most difficult to account for
• Methods used to estimate extent
– Open interviews
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