Did state antiquity matter for the size of the informal economy?

Atangana Ondoa Henri () and Seabrook Arthur Mveng ()
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Atangana Ondoa Henri: University of Yaounde II
Seabrook Arthur Mveng: University of Yaounde II

Economics of Governance, 2022, vol. 23, issue 2, No 2, 115-131

Abstract: Abstract This study investigates how state history influences the size of the informal sector. The study employs a two-stage least squares estimation technique with data from 91 countries for the period 1991–2015 to examine this relationship. Our results show that longer state history reduces the size of the informal sector. Therefore, young states with a large informal sector should be mindful that state building is a time-consuming process, and any radical transformation in order to accelerate state development beyond its realistic capacity, may increase the informal sector size and leads to disastrous outcomes.

Keywords: State antiquity; Institutional quality; Two-stage least squares; Informal sector size (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:ecogov:v:23:y:2022:i:2:d:10.1007_s10101-022-00274-1

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DOI: 10.1007/s10101-022-00274-1

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