Study: The underground economy in Canada
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Between 1992 and 2008, the underground economy in Canada increased at a slower pace than the economy as a whole, according to a new study on the extent of unreported productive activities in the economy.
The underground economy in Canada was estimated at an upper limit of $36 billion in 2008, up 90% from 1992. During the same period, nominal gross domestic product (GDP) more than doubled (+128%).
The main reason the underground economy has increased more slowly is that industries traditionally considered to be involved in underground activity are a declining portion of the overall economy. Those sectors of the economy less affected by the underground economy are growing relatively faster.
In 2008, the three most significant sectors in terms of underground activity were construction (30%), retail trade (16%) and accommodation and food services (12%). Combined, they accounted for nearly 60% of total value added of underground activities.
Note: This study uses the upper bound methodology, as recommended by the Organisation for Economic Co-operation and Development handbook on measuring the non-observed economy, and also draws on tax reassessment data to examine the industrial distribution of underground activity. It is important to note that there is no direct data source for measuring the underground economy. Estimates of its size are based on indicators or upper bounds. As a result, they are less likely to be as accurate or reliable as other Canadian Economic Accounts estimates.
The underground economy can be defined as consisting of market-based economic activities, whether legal or illegal, that escape measurement due to their hidden, illegal, or informal nature. For the purpose of this study, some illegal activities have been excluded.
The results presented in this study include estimates for underground activities currently included in the published gross domestic product estimates and activities that may not be included. This study does not attempt to separate these two components.
For more information, to obtain data, or to enquire about the concepts, methods or data quality of this release, contact the information officer (613-951-3640; email@example.com), Income and Expenditure Accounts Division.
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