Black Economy

AAA

DEFINITION of 'Black Economy'

The segment of a country's economic activity that is derived from sources that fall outside of the country's rules and regulations regarding commerce. The activities can be either legal or illegal depending on what goods and/or services are involved.

INVESTOPEDIA EXPLAINS 'Black Economy'

For instance, a construction worker who is paid under the table will neither have taxes withheld, nor will the employer pay taxes on the his earnings. The construction work is legal; it is the nonpayment of taxes that classifies the event as part of the black economy. The illegal-weapons trade is an example of black-economy activity that is illegal.


Black markets are those goods and services that form the black (or underground) economy. Typically, black markets arise when a government restricts economic activity for particular goods and services, either by making the transaction illegal or by taxing the item so much that it becomes cost-prohibitive. A black market may arise to make illegal goods and services available or to make expensive items available for less money (such as pirated software).

RELATED TERMS
  1. Bitcoin

    A digital or virtual currency that uses peer-to-peer technology ...
  2. Black Market

    Economic activity that takes place outside government-sanctioned ...
  3. Gray Market

    An unofficial market where securities are traded. Gray (or “grey”) ...
  4. Linden Dollar

    A digital currency utilized in the virtual world Second Life. ...
  5. Knowledge Economy

    A system of consumption and production that is based on intellectual ...
  6. Economics

    A social science that studies how individuals, governments, firms ...
Related Articles
  1. How To Report A Tax Cheat
    Taxes

    How To Report A Tax Cheat

  2. Taking A Look At Tax Havens
    Taxes

    Taking A Look At Tax Havens

  3. What Is Opportunity Cost And Why Does ...
    Economics

    What Is Opportunity Cost And Why Does ...

  4. Competitive Advantage Counts
    Active Trading

    Competitive Advantage Counts

comments powered by Disqus
Hot Definitions
  1. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  2. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  3. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  4. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  5. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  6. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
Trading Center