Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/196127
Authors: 
Sahnoun, Marwa
Abdennadher, Chokri
Year of Publication: 
2019
Series/Report no.: 
Economics Discussion Papers No. 2019-30
Abstract: 
This paper studies the effects and causal links between the shadow economy and the unemployment rate using a dynamic simultaneous-equation panel data model for 38 developing and 40 developed countries over the 2000−2015 period. The analysis suggests that there is a unidirectional and negative causality running from the unemployment rate to the shadow economy in the developing countries. However, in the developed countries, there is a bidirectional and negative causal relationship between the shadow economy and unemployment rate. The sensitivity of the results makes the authors realize that institutional quality interacts strongly with the relationship between the shadow economy and the unemployment rate. In countries with a good institutional quality, the unemployment rate is associated with a weak informal economy, whereas in countries with low institutional quality, it strongly drives the informal economy.
Subjects: 
shadow economy
unemployment rate
institutional quality
dynamic simultaneous-equation panel data models
JEL: 
O17
E26
J60
Creative Commons License: 
https://creativecommons.org/licenses/by/4.0/
Document Type: 
Working Paper

Files in This Item:
File
Size
289.99 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.