The shadow economy refers to economic activities that occur outside of government regulation and taxation. This includes unreported income from informal jobs, illegal trade, and unregistered businesses. While these activities can provide income for individuals, they often evade taxes and can lead to a lack of protections for workers. The shadow economy can be significant in many countries, impacting overall economic growth and government revenue. It often thrives in areas with high unemployment or strict regulations, as people seek alternative ways to earn a living. Understanding the shadow economy is crucial for policymakers aiming to create fair and effective economic systems.