Informal economy and extractive institutions

Andrea Fracasso, Giuseppe Vittucci Marzetti and Diego Coletto

Review of Economics and Institutions, 2018, vol. 9, issue 1

Abstract: The paper aims at assessing the impact of the extractiveness of institutions on the size of the informal economy. After the identification of the variables suitable to proxy the distinct features of institutions, among which their extractiveness, the paper offers a battery of cross-section regressions over two large samples of developed and developing countries. The results suggest that the extractiveness of institutions is a significant determinant of the size of the informal economy and that greater informality is associated with a higher perceived distrust in formal institutions. The results are robust to the inclusion of standard controls, as well as proxies for culture, generalized trust and generalized morality.

Keywords: Informal economy; Extractive Institutions; Institutional quality (search for similar items in EconPapers)
JEL-codes: D02 D73 O17 P16 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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