EconPapers    
Economics at your fingertips  
 

The Underground Economy in the Late 1990s: Evading Taxes, or Evading Competition?

Liliane Giardino-Karlinger ()

Vienna Economics Papers from University of Vienna, Department of Economics

Abstract: This paper studies the driving forces behind the considerable expansion of the underground economy during the late 1990s. I propose a novel explanation for this phenomenon: the sharp increase in market competition worldwide, which reduces prices and profits and drives firms into the shadow economy. Empirical evidence from a panel covering 42 countries from 1995 to 2000 shows that increased competition is indeed correlated with an expansion of the underground economy. The effect is weaker in high-income, high-tax, low-corruption countries that provide public services which make it worthwhile for firms to operate in the official economy despite growing competitive pressure.

JEL-codes: H26 L11 O17 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev and nep-pbe
Date: 2008-06
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link)
http://homepage.univie.ac.at/Papers.Econ/RePEc/vie/viennp/vie0802.pdf (application/pdf)

Related works:
Journal Article: The Underground Economy in the Late 1990s: Evading Taxes, or Evading Competition? (2009) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:vie:viennp:0802

Access Statistics for this paper

More papers in Vienna Economics Papers from University of Vienna, Department of Economics
Bibliographic data for series maintained by Paper Administrator ().

 
Page updated 2018-09-18
Handle: RePEc:vie:viennp:0802