Francesco Pappadà

Thematic seminars
Macro and labor market seminar

Francesco Pappadà

Università Cà Foscari Venezia and Paris School of Economics
Rethinking the Informal Economy and the Hugo Effect
Joint with
Kenneth Rogoff

IBD Salle 15

Îlot Bernard du Bois - Salle 15

5-9 boulevard Maurice Bourdet
13001 Marseille

Friday, December 8 2023| 12:30pm to 1:30pm

Marco Fongoni: marco.fongoni[at]
Francesco Gaudio: francesco-saverio.gaudio[at]


This paper offers a new approach to measuring the size of the informal economy based on VAT data for the European Union. Although data intensive, our EVADE measure is simpler and more transparent than existing measures. EVADE also shows more variation across countries of Europe than earlier measures, including significantly higher informality in Greece, Italy and Spain, for example. Moreover, we find considerably higher variation within countries across time; in a cross-country time series regression, controlling for tax rates, we confirm that the informal economy grows significantly in recessions and decreases in booms, which we term the “Hugo effect”.