Labour supply and wage functions in the "Black" sector of the Danish labour market

The high level of direct and indirect taxes in Denmark is generally thought to give rise to great effort at tax evasion. In this study, the untaxed ("black") sector is analysed on the basis of a cross-sectional sample from 1996 which contains survey information on untaxed activities and extensive information from tax registers and other administrative registers. Some of the main result from the analyses are that economic variables are not found to have a significant influence on the labour supply to the "black" sector. Estimations of wage functions for the "black" and the regular sectors show that the wage formation is quite different in the two sectors.