Abstract
Estimating the size of the hidden economy continues to attract the interest of both researchers and politicians alike. However, and despite the recent increase in the technical sophistication of the two estimation methods most commonly employed in the empirical literature, namely the monetary approach and the multiple causes-indicators technique, it is necessary to continue making advances in our knowledge of the relationships between the hidden economy and its economic and institutional environment. Against this background, this paper sets out to provide empirical evidence on this question. Using the estimation made by Gadea and Serrano () of hidden income in Spain during the period 1964–1998, a univariate and multivariate causality analysis is carried out between hidden income and the representative variables of the legal economy, taxation, the labour market and currency. The results allow one to draw a number of interesting conclusions on the complexity of these relationships.
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