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Analyzing the Determinants of the Shadow Economy With a “Separate Approach”. An Application of the Relationship Between Inequality and the Shadow Economy

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  • Dell’Anno, Roberto

Abstract

This paper suggests a “separate” approach to analyze the determinants of the shadow economy (SE). It is applied to investigate the relationship between inequality and the SE on a cross-section of 118 countries. We disentangle the effect of inequality on the SE ratio by estimating both direct and indirect effects on both the numerator and denominator of the ratio separately. We find that an increase in inequality increases the SE ratio. This positive correlation is primarily due to a reduction in the official GDP rather than an increase in the SE.

Suggested Citation

  • Dell’Anno, Roberto, 2016. "Analyzing the Determinants of the Shadow Economy With a “Separate Approach”. An Application of the Relationship Between Inequality and the Shadow Economy," World Development, Elsevier, vol. 84(C), pages 342-356.
    • Handle: RePEc:eee:wdevel:v:84:y:2016:i:c:p:342-356
    DOI: 10.1016/j.worlddev.2015.08.026
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    Citations

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    Cited by:

    1. Medda, Tiziana & Palmisano, Flaviana & Sacchi, Agnese, 2022. "Informal we stand? The role of social progress around the world," International Review of Economics & Finance, Elsevier, vol. 78(C), pages 660-675.
    2. Salmon Mugoda & Stephen Esaku & Rose Kibuka Nakimu & Edward Bbaale & Robert Read, 2020. "The portrait of Uganda’s informal sector: What main obstacles do the sector face?," Cogent Economics & Finance, Taylor & Francis Journals, vol. 8(1), pages 1843255-184, January.
    3. Leonardo Pompa, 2017. "From the Unusual to the Useful: Digital Platforms and Co-Working Spaces as Instruments for Human Resource Management in Emerging Economic and Organizational Environments," International Journal of Business and Management, Canadian Center of Science and Education, vol. 12(8), pages 143-143, July.
    4. Tetiana Kolomoiets & Nelli Tsybulnyk & Oleksandr Moroz & Vitaliy Prymachenko & Vadym Khashev, 2021. "Influence of shadow economy legalization on national security of Ukraine," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 8(3), pages 420-437, March.
    5. Roberto Dell'Anno, 2021. "Inequality and informality in transition and emerging countries," IZA World of Labor, Institute of Labor Economics (IZA), pages 325-325, April.

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