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Religion and the shadow economy

Friedrich Heinemann () and Friedrich Schneider ()

No 11-038, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: Religion is increasingly acknowledged to be a cultural dimension which affects economic outcomes in different regards. This contribution focuses on religion's possible impact on the shadow economy. Different dimensions of the religious markets are taken into account. These dimensions refer to the overall degree of religiosity, the specific impact of different religions, religious competition or the proximity between religion and the state. The empirical test makes use of the largest available cross-section on the size of the shadow economy and matches this dataset with numerous religious indicators. Summary measures of general religiosity or indicators of religious competition do not have a measurable impact. However, robust differences emerge across religions. Countries dominated by Islam or Eastern religions are associated with smaller shadow economies compared to Christian countries. Furthermore, the proximity between state and religion matters. Close ties between both are typical for smaller shadow economies. This is in line with the view that religion uses its normative influence to protect state interests if there is a mutually beneficial relationship.

Keywords: Economics of religion; tax morale; shadow economy (search for similar items in EconPapers)
JEL-codes: H26 O17 O57 Z12 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-cul and nep-dev
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Journal Article: Religion and the Shadow Economy (2015) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:11038

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