What Are The Underground Economic Activities?

In recent years, many writers argued that there has been an explosive growth in the underground economy, which covers a wide variety of activities that are not reported to the government. These includes activities like gambling, prostitution, drug dealing, work done by illegal immigrants, battering of services, padding of expense accounts, smuggling, skimming, money from the cash register, and even growing food at home. Some observers have suggested that government regulation and high taxes have driven a substantial part of economic activity underground.

Most underground activity is motivated by the desire to reduce taxes or avoid government control or sanctions. When drug dealers omit sales of cocaine from their tax returns, they do so not only to reduce taxes but also to hide an illegal activity. In contrast, when people hire a full time nanny to take care of children and fail to pay social security taxes, they do so only to reduce taxes or avoid the hassle of filling out forms, since the activity itself is perfectly legal.  

Not all-underground activity is properly part of gross domestic product. In general, national account exclude illegal activities from a measure of national output these are social consensus bad or not goods. A swelling heroin trade will not enter into gross domestic product.