The not so dark side of trust: does trust increase the size of the shadow economy?

Johanna D'Hernoncourt and Pierre-Guillaume Méon

Working Papers CEB from ULB -- Universite Libre de Bruxelles

Abstract: This paper studies the relationship between the size of the shadow economy and generalized trust, on a cross-section of countries, both developed and developing, and finds that it is significantly negative. That relationship is robust to controlling for a large set of economic, policy, and institutional variables, to changing the estimate of the shadow economy and the estimation period, and to controlling for endogeneity. It is independent from trust in institutions. We provide evidence that it is mainly present in the sample of developing countries. Latest version, September 2011: http://www.solvay.edu/sites/upload/files/CEB_WorkingPapers/LastUpdate/wp08030.pdf

Keywords: Shadow economy; informal sector; trust. (search for similar items in EconPapers)
JEL-codes: H26 O11 O17 O57 Z13 (search for similar items in EconPapers)
Pages: 37 p.
Date: 2008-10
New Economics Papers: this item is included in nep-dev and nep-soc
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Citations: View citations in EconPapers (4)

Published by: Université Libre de Bruxelles, Solvay Business School, Centre Emile Bernheim (CEB)

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https://dipot.ulb.ac.be/dspace/bitstream/2013/14573/1/wp08030.pdf wp08030 (application/pdf)

Related works:
Journal Article: The not so dark side of trust: Does trust increase the size of the shadow economy? (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:sol:wpaper:08-030

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