Casting a Long Shadow? Cross-border Spillovers of Shadow Economy across American States

Rajeev Goel and James Saunoris

Public Finance Review, 2016, vol. 44, issue 5, 610-634

Abstract: This article examines the determinants of the shadow economy across American states, with emphasis on cross-border spillover effects. Results show positive spillovers of shadow activities across state borders with different specifications. In other effects, greater unionization in a state induces businesses to go underground, while states without a sales tax had a smaller shadow economy, ceteris paribus. Greater state product checked shadow growth, with military and nonmilitary state products having opposite effects. Finally, states bordering Canada and Mexico had different flows from the shadow sector.

Keywords: shadow economy; spillovers; taxes; unions; United States (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:44:y:2016:i:5:p:610-634

DOI: 10.1177/1091142115584815

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