Corruption and the Shadow Economy: An Empirical Analysis

Axel Dreher and Friedrich Schneider ()

CREMA Working Paper Series from Center for Research in Economics, Management and the Arts (CREMA)

Abstract: This paper analyzes the influence of the shadow economy on corruption and vice versa. We hypothesize that corruption and shadow economy are substitutes in high income countries while they are complements in low income countries. The hypotheses are tested for a cross-section of 120 countries and a panel of 70 countries for the period 1994-2002. Our results show that the shadow economy reduces corruption in high income countries, but increases corruption in low income countries. We also find that stricter regulations increase both corruption and the shadow economy.

Keywords: Corruption; Shadow Economy; Regulation; Tax Burden (search for similar items in EconPapers)
JEL-codes: D73 H26 (search for similar items in EconPapers)
Date: 2006-01
New Economics Papers: this item is included in nep-pbe and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (74)

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Related works:
Journal Article: Corruption and the shadow economy: an empirical analysis (2010)
Working Paper: Corruption and the Shadow Economy: An Empirical Analysis (2006)
Working Paper: Corruption and the Shadow Economy: An Empirical Analysis (2006)
Working Paper: Corruption and the shadow economy: An empirical analysis (2006)
Working Paper: Corruption and the Shadow Economy: An Empirical Analysis (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:cra:wpaper:2006-01

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