Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/209127
Authors: 
Schneider, Friedrich
Khan, Shabeer
Baharom Abdul Hamid
Khan, Abidullah
Year of Publication: 
2019
Series/Report no.: 
Economics Discussion Papers No. 2019-67
Abstract: 
There are considerable studies regarding the contribution of international migrants' remittances to economic growth while there is a lack of studies which investigate the effect of remittances on shadow economy. The authors explore empirically the effect of remittances and its interaction effect with tax on shadow economy by using panel data covering the period 2004-2015 and applying the GMM method for 141 countries. Their empirical model, in which a remittance-recipient government, operating in tax environment of some regimes (imposition of different levels and kinds of taxes), predicts a negative effect of remittances on shadow economy, is mitigated by a higher tax regime. In other words, the paper argues that a well-established negative correlation between remittances and shadow economy has been weakened by tax rule. The study contributes to the current literature on public policy that gives importance to know the causes of shadow economy and boost remittances effect. The authors' baseline results are robust to various computations of macroeconomics variables, institutions variables and freedom variables.
Subjects: 
remittances
shadow economy
tax regime
panel technique
JEL: 
O17
H24
H71
F24
Creative Commons License: 
https://creativecommons.org/licenses/by/4.0/
Document Type: 
Working Paper

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