Small Businesses and the Shadow Economy
AbstractThis paper investigates causalities between small businesses and the shadow economy in ten New Member States of the European Union in the years 2000–2005. The transition from a centrally planned to a market economy, with deregulation and privatization of economic activities, has yielded new opportunities for small businesses, new entrepreneurial ideas, and new income sources in these countries. Yet, rigid legislation, high tax wedges, and transaction costs of government institutions have increased the incentives for people to take their work into the shadow economy. To account for the simultaneity and latent variable effects we apply the instrumental variables econometric approach to study the association between small business and the shadow economy. We find that these variables are (weakly) negatively correlated, implying that the macroeconomic environment and institutional framework have improved, encouraging entrepreneurial activities while somewhat impeding the further development of the shadow economy.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Charles University Prague, Faculty of Social Sciences in its journal Finance a uver - Czech Journal of Economics and Finance.
Volume (Year): 58 (2008)
Issue (Month): 01-02 (January)
small business; self-employment; shadow economy;
Find related papers by JEL classification:
- O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
- M21 - Business Administration and Business Economics; Marketing; Accounting - - Business Economics - - - Business Economics
- L29 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Other
- K49 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Other
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bartelsman, Eric & Haltiwanger, John & Scarpetta1, Stefano, 2004.
"Microeconomic evidence of creative destruction in industrial and developing countries,"
Policy Research Working Paper Series
3464, The World Bank.
- Bartelsman, Eric & Haltiwanger, John C. & Scarpetta, Stefano, 2004. "Microeconomic Evidence of Creative Destruction in Industrial and Developing Countries," IZA Discussion Papers 1374, Institute for the Study of Labor (IZA).
- Eric J. Bartelsman & John Haltiwanger & Stefano Scarpetta, 2004. "Microeconomic Evidence of Creative Destruction in Industrial and Developing Countries," Tinbergen Institute Discussion Papers 04-114/3, Tinbergen Institute.
- Djankov, Simeon & La Porta, Rafael & Shleifer, Andrei & Lopez de Silanes, Florencio, 2001.
"The regulation of entry,"
Policy Research Working Paper Series
2661, The World Bank.
- Simeon Djankov & Rafael LaPorta & Florencio Lopez-de-Silanes & Andrei Shleifer, . "The Regulation of Entry," Working Paper 19462, Harvard University OpenScholar.
- Djankov, Simeon & La Porta, Rafael & López-de-Silanes, Florencio & Shleifer, Andrei, 2001. "The Regulation of Entry," CEPR Discussion Papers 2953, C.E.P.R. Discussion Papers.
- Simeon Djankov & Rafael La Porta & Florencio LopezdeSilanes & Andrei Shleifer, 2000. "The Regulation of Entry," NBER Working Papers 7892, National Bureau of Economic Research, Inc.
- Djankov, Simeon & La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei, 2001. "The Regulation of Entry," Working Paper Series rwp01-015, Harvard University, John F. Kennedy School of Government.
- Simeon Djankov & Rafael La Porta & Florencio Lopez-de-Silanes & Andre Shleifer, 2000. "The Regulation of Entry," Harvard Institute of Economic Research Working Papers 1904, Harvard - Institute of Economic Research.
- Ertugrul Deliktas & Mehmet Balcilar, 2005. "A Comparative Analysis of Productivity Growth, Catch-Up, and Convergence in Transition Economies," Emerging Markets Finance and Trade, M.E. Sharpe, Inc., vol. 41(1), pages 6-28, January.
- Choi, Jay Pil & Thum, Marcel, 2003.
"Corruption and the shadow economy,"
Dresden Discussion Paper Series in Economics
02/03, Dresden University of Technology, Faculty of Business and Economics, Department of Economics.
- Ruta Aidis, 2003. "Entrepreneurship and Economic Transition," Tinbergen Institute Discussion Papers 03-015/2, Tinbergen Institute.
- Roy Thurik & Isabel Grilo, 2006. "Entrepreneurship in the old en new Europe," Scales Research Reports N200516, EIM Business and Policy Research.
- Jože Kocjancic & Stefan Bojnec, 2011. "Analisys of the Shadow Economy in the Wood Industry," MIC 2011: Managing Sustainability? Proceedings of the 12th International Conference, Portorož, 23–26 November 2011 [Selected Papers], University of Primorska, Faculty of Management Koper.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Lenka Herrmannova).
If references are entirely missing, you can add them using this form.