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Did state antiquity matter for the size of the informal economy?

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  • Atangana Ondoa Henri

    (University of Yaounde II)

  • Seabrook Arthur Mveng

    (University of Yaounde II)

Abstract

This study investigates how state history influences the size of the informal sector. The study employs a two-stage least squares estimation technique with data from 91 countries for the period 1991–2015 to examine this relationship. Our results show that longer state history reduces the size of the informal sector. Therefore, young states with a large informal sector should be mindful that state building is a time-consuming process, and any radical transformation in order to accelerate state development beyond its realistic capacity, may increase the informal sector size and leads to disastrous outcomes.

Suggested Citation

  • Atangana Ondoa Henri & Seabrook Arthur Mveng, 2022. "Did state antiquity matter for the size of the informal economy?," Economics of Governance, Springer, vol. 23(2), pages 115-131, June.
    • Handle: RePEc:spr:ecogov:v:23:y:2022:i:2:d:10.1007_s10101-022-00274-1
    DOI: 10.1007/s10101-022-00274-1
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