Schattenwirtschaft und Schwarzarbeit -- Eine wirtschafts- und gesellschaftspolitische Herausforderung.

The growing shadow economy in Germany is a challenge to the welfare state and economic policy. The burden of taxation and social security contributions combined with rising state regulatory activities are the main causes for the increase in the shadow economy. The consequences are ambivalent, since illicit work can increase welfare and boost institutional change but can also lead to a crisis of the welfare state. A substantial reform of the social security system and the tax system can reduce the incentives to use the ‘exit option’. In addition, the use of the ‘voice-option’ must become more attractive. [ABSTRACT FROM AUTHOR]