This dissertation mainly analyzes the shadow economy based on sub-country level data which includes 26 provinces, ranging from 1999 to 2014, on application of the MIMIC model. The base year selection and benchmark procedure estimation in terms of China's situation is adopted so that the size of shadow economy in different provinces can be estimated. In addition, revenue (% of GDP), government consumption expenditure (% of GDP) and unemployment rate as well as indicator variables consisting of real GDP growth rate and labor force participate rate are employed in the empirical analysis. Ultimately, we compare and analyze the size and the trend of shadow economy in different provinces as well as the implication of shadow economy on economic growth so as to provide some insightful suggestions for China development.