Introduction

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The aim of the Underground Economy (UE) study is to provide information on the extent of underground economic activity in Canada and the sources of these activities. The impact of these activities on the measurement of published gross domestic product (GDP) for Canada is also of concern.

The measurement of the underground economy at Statistics Canada is not new. The first study was carried out by Berger (1986)Note1, followed by Gervais (1994)Note2, then Terefe, Barber-Dueck and Lamontagne (2011)Note3 and Morissette (2012)Note4.  The current study is a continuation of this work, and draws heavily on it, specifically the work of Gervais (1994) and Terefe, Barber-Dueck and Lamontagne (2011).

The current study is largely comparable to the one published in September 2012 for the period 1992 to 2009. It incorporates the revised definitions and classifications used by the Canadian System of National Accounts (CSNA) that were introduced in October 2012. The results are also more timely, covering the period 1992 to 2011. Finally, a volume measure of UE activity is introduced.

Readers should be careful in interpreting the results of this study. First, estimates presented give an upper bound. In order to derive these bounds, assumptions were made to estimate the maximum potential underground activity beyond what is already included in GDP using standard methods. Second, by its very nature, it is difficult to obtain information on UE activities so that the estimates necessarily rely on assumptions, weak indicative information and various indirect methods. Third, the official GDP already includes some implicit and explicit adjustments for UE activity.Note5 For these reasons the estimates calculated in this study cannot simply be added to the official GDP to arrive at a measure of GDP including UE activity.

The report is organized as follows. The next section deals with the definition and scope of the study. This is followed by a section on data sources and methods. Results are presented in Section 4 for GDP aggregates of the expenditure, income and industry accounts for selected years over the period 1992 to 2011, but available on request for all years. The report concludes with a summary and recommendations for future work. Included in appendices are various statistical tables and detailed methodology.


Notes

  1. Berger, Seymour 1986, The Unrecorded Economy: Concepts, Approach and Preliminary Estimates for Canada, 1981, Canadian Statistical Review, Ottawa, Ontario.
  2. Gervais, Gylianne 1994, The Size of the Underground Economy in Canada, Statistics Canada, Catalogue no 13-603-MPE1994002. Ottawa, Ontario.
  3. Terefe, Barber-Dueck, Lamontagne 2011, Estimating the Underground Economy in Canada, 1992-2008, Statistics Canada, Income and Expenditure Accounts Division, Ottawa, Ontario.
  4. Morissette, Charles 2012, The underground economy in Canada, 1992 to 2009. Statistics Canada, The Daily, September 21, 2012. Ottawa, Ontario.
  5. Some underground activity is explicitly adjusted for in the accounts (e.g., contraband tobacco). Other activities may be implicitly included through the balancing adjustments made to the accounts.
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