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Title:Corruption and the shadow economy: An empirical analysis PDF Logo
Authors:Dreher, Axel
Schneider, Friedrich
Issue Date:2006
Series/Report no.:Arbeitspapiere, Konjunkturforschungsstelle, Eidgenössische Technische Hochschule Zürich 123
Abstract:This paper analyzes the influence of the shadow economy on corruption and vice versa. We hypothesize that corruption and shadow economy are substitutes in high income countries while they are complements in low income countries. The hypotheses are tested for a crosssection of 120 countries and a panel of 70 countries for the period 1994-2002. Our results show that the shadow economy reduces corruption in high income countries, but increases corruption in low income countries. We also find that stricter regulations increase both corruption and the shadow economy.
Subjects:Corruption
Shadow Economy
Regulation
Tax Burden
JEL:D73
H26
O17
O5
Persistent Identifier of the first edition:doi:10.3929/ethz-a-005118325
Document Type:Working Paper
Appears in Collections:KOF Working Papers, KOF Konjunkturforschungsstelle, ETH Zürich

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