The Productivity Slowdown and the Underground Economy

Document Type


Publication Date

Summer 1989


The productivity slowdown in the 1970s and 1980s has received a great deal of attention in die literature. Most studies have assumed that the data measuring output are correct and that data problems are primarily in the area of measuring capital. This paper shows that a significant part of the observed productivity slowdown is due to the underreporting of income due to the growth of the underground economy.

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