Title: Informal self-employment within the non-observed economy of Israel

Authors: Labib Shami; Gil Cohen; Osnat Akirav; Arie Herscovici; Limor Yehuda; Sagit Barel-Shaked

Addresses: Department of Economics, The Western Galilee College, P.O. Box 2125, Akko, 95 Bethlehem Street, Haifa, 3556850, Israel ' Management Department, The Western Galilee College, P.O. Box 2125, Akko, 9 Got Levin Haifa, Israel ' Department of Political Science, The Western Galilee College, P.O. Box 2125, Akko, 27 Harzit Road, KfarVradim, 2514700, Israel ' Department of Political Science, The Western Galilee College, P.O. Box 2125, Akko, 36 Hagalil St., Givat Ela, 36570, Israel ' Department of Criminology, The Western Galilee College, P.O. Box 2125, Akko, 12 Mitzpe Yam St. Herzelia, 46590, Israel ' Department of Economics and Management, The Western Galilee College, P.O. Box 2125, Akko, 74 Brosh, Meona, 2492000, Israel

Abstract: This study estimates the size of the non-observed economy, and the share within it that stems from informal economic activity among the self-employed, using a modified currency demand approach adapted to the Israeli economy. By assessing the demand for currency arising from the economic activity of the self-employed, the extent of informal self-employment is estimated as a percentage of GDP. According to the model, the share of the non-observed economy and informal economic activity among the self-employed has been characterised by a downward trend over the last decade. In 2019, the informal economic activity among the self-employed reached nearly NIS 102 billion, 65% of the size of the non-observed economy. The rest stems from illegal activity, which accounts for about NIS 55 billion.

Keywords: informal economy; demand for money; tax evasion; informal labour markets; illegal behaviour.

DOI: 10.1504/IJESB.2024.138271

International Journal of Entrepreneurship and Small Business, 2024 Vol.52 No.2, pp.159 - 180

Received: 22 May 2021
Accepted: 20 Jun 2021
Published online: 01 May 2024 *

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