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Digitalization and informal economy: a global evidence of internet usage

Author

Listed:
  • Canh Phuc Nguyen

    (University of Economics Ho Chi Minh City (UEH)
    University of Economics Ho Chi Minh City (UEH))

  • Christophe Schinckus

    (International School of Management)

  • Quang Binh Nguyen

    (University of Economics Ho Chi Minh City (UEH))

  • Duyen Thuy Le Tran

    (University of Economics Ho Chi Minh City (UEH))

Abstract

This article investigates the links between the technological evolution and the importance of informal economic activities. We examine the influences of internet usage on the shadow economy in a global sample between 2002 and 2015. With this purpose, we mobilize the panel fixed-effects estimate and the panel corrected standard errors estimate (as a robustness check) for the analysis of 114 economies (and three sub-samples including high-income economies (HIEs), upper-middle-income economies (UMEs), and lower-middle-income economies (LMEs)). Our results indicate that the use of the internet generally has a negative impact on the shadow economy. This influence of internet is consistent across all institutional environments. Interestingly, technology is not spread through the shadow economy in the same way everywhere since we observe a U-shaped relationship between internet usage and the shadow economy. Our research shows that technology might also have a negative influence on official activities if its implementation is not combined with an appropriate institutional policy allowing policy-makers to avoid the technology-side effects.

Suggested Citation

  • Canh Phuc Nguyen & Christophe Schinckus & Quang Binh Nguyen & Duyen Thuy Le Tran, 2024. "Digitalization and informal economy: a global evidence of internet usage," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 51(1), pages 1-37, March.
  • Handle: RePEc:spr:epolin:v:51:y:2024:i:1:d:10.1007_s40812-023-00278-w
    DOI: 10.1007/s40812-023-00278-w
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    More about this item

    Keywords

    Shadow economy; Institutional quality; Internet; Technology; Panel data;
    All these keywords.

    JEL classification:

    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets

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