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Shadow Economy and Poverty: What Causes What?

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  • Thi Hong Hanh Pham

    (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Nantes Univ - IAE Nantes - Nantes Université - Institut d'Administration des Entreprises - Nantes - Nantes Université - pôle Sociétés - Nantes Univ - Nantes Université)

Abstract

Despite a growing number of empirical works on the shadow economy and poverty, the bidirectional causality between these two phenomena has been a relatively neglected area or only treated in a case study of a specific country. So that, the important novelty of this paper is to explore the two-way linkage between poverty and the informal economy by using a panel dataset of around 100 developing countries over the period 1991–2017. Our empirical finding concludes such a complex causality between poverty and informality in the developing world. In addition, this relationship critically depends on a country's level of economic development. Therefore, the policies, which help developing countries to get out of poverty as well as to regulate the informal activities, should be carefully considered.

Suggested Citation

  • Thi Hong Hanh Pham, 2022. "Shadow Economy and Poverty: What Causes What?," Post-Print hal-04486050, HAL.
    • Handle: RePEc:hal:journl:hal-04486050
    DOI: 10.1007/s10888-021-09518-2
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