Document Type

Article

Publication Title

Yale Law Journal

Abstract

All sorts of activities, some desirable and some unsavory, are part of the underground economy. The physician who takes cash for a Saturday office visit is working off the books; so is the waiter who reports some but not all tips as income; so too is the maid who pays no taxes on her wages. But the underground economy is far more vast than these examples suggest, for it embraces much more than the unreported, unrecorded, or informal economy. It includes industries that rely on illegal aliens and businesses that are completely outlawed, such as the trade in narcotic drugs. Indeed the trade in medicinal drugs belongs on the list, for medicines that are banned in the United States but licensed overseas are doubtless smuggled into this country for use by desperate patients. Surely one could multiply this list of examples many times over. This Essay will not, however, try to describe the scope of the underground economy or the kinds of activities that compose it. Both topics raise empirical questions better left to specialists. Instead, this Essay will confront two questions. The first, addressed in Part I, is normative: Is an underground economy good or bad, and why? The second question, discussed in Part II, is a combination of normative and descriptive: Are the legal prohibitions on specific underground activities counterproductive? To understand how approaches to the underground economy work in practice, we must supplement our basic normative intuitions with concrete examples.

First Page

2157

DOI

https://doi.org/10.2307/797043

Volume

103

Publication Date

1994

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