The Effect of Public Education Expenditure on Shadow Economy: A Cross-Country Analysis

Maria Berrittella

International Economic Journal, 2015, vol. 29, issue 4, 527-546

Abstract: This paper empirically examines whether devoting more resources to education can reduce the size of the shadow economy on a cross-section of countries. The findings show a negative relationship between public education expenditure and the size of the shadow economy, which is robust to the inclusion of different proxies for the control variables, a large set of policy variables, regional differences and endogeneity. The findings also emphasize the role of education, suggesting that public policies devoted to higher education level imply a decreasing effect on the shadow economy.

Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:taf:intecj:v:29:y:2015:i:4:p:527-546

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DOI: 10.1080/10168737.2015.1081259

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