@techreport{Krakowski2005Determinants,
abstract = {This paper analyses the determinants of the size of the informal economy using crosscountry
regressions. Two sets of global data using indirect estimation techniques and
the perception of business leaders for 109 countries as well as a regional set for Latin
America based on direct data are used to estimate the size of the informal economies.
Indirect estimation techniques arrive at higher estimates of the size of the informal
economy than the perceptions of business leaders because they include not only the
(fundamentally legal) activities of the informal sector, but also those activities which are
illegal per se. Both kinds of estimate show strong regional differences in the size of the
informal economies. Regressions on a set of indicators covering the intensity of
regulations, taxes and the cost of establishing a business reveal that the intensity of
labour regulations seems to be the most important factor in explaining the size of the
informal economy in cross-country regressions using the rational behaviour approach.
Socio-cultural indicators are only important in explaining the size of the informal
economies in Latin America. Government efficiency is an important factor in explaining
the size of the informal economy in world regressions. Regional regressions reveal that
different aspects of governance dominate the relationship between government
efficiency and the size of the informal economy in the different regions. Governments
that seek to limit or decrease the size of the informal economy must therefore start from
a country-specific analysis of the reasons why economic agents choose to conduct their
business in the informal sector.},
author = {Michael Krakowski},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {H26; O17; 330; informal sector; tax evasion; business regulation; Informeller Sektor; Standortfaktor; Staatliche Einflussnahme; Sch\"{a}tzung; Welt},
language = {eng},
number = {313},
title = {Determinants of the Informal Economy : The Importance of Regional Factors},
type = {HWWA Discussion Paper},
url = {http://hdl.handle.net/10419/19285},
year = {2005}
}
