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The changing nature of the OECD shadow economy

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  • Maurizio Bovi

    ()

  • Roberto Dell’Anno

    ()

Abstract

As recently suggested, the shadow economy and its determinants (taxation, regulations, corruption, etc.) are linked such that just two stable equilibria are possible. In the good one there is a small hidden sector, large fiscal revenues and honest/appreciated institutions. The other (bad) equilibrium is quite the opposite. Our paper examines the links between these variables in relatively uncorrupt systems. Unlike the mainstream literature, we suggest that a continuum of SE equilibrium rates can emerge and that taxation and underground activities can be positively correlated. Empirical evidence for OECD countries broadly supports the model.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Maurizio Bovi & Roberto Dell’Anno, 2010. "The changing nature of the OECD shadow economy," Journal of Evolutionary Economics, Springer, vol. 20(1), pages 19-48, January.
  • Handle: RePEc:spr:joevec:v:20:y:2010:i:1:p:19-48 DOI: 10.1007/s00191-009-0138-8
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    References listed on IDEAS

    as
    1. Simeon Djankov & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2002. "The Regulation of Entry," The Quarterly Journal of Economics, Oxford University Press, vol. 117(1), pages 1-37.
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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. IL CLUB MED DELLA PUBBLICA AMMINISTRAZIONE
      by Maurizio Bovi in La Voce on 2012-01-17 18:00:00

    Citations

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    Cited by:

    1. Roberto Dell'Anno & Ferda Halicioglu, 2010. "An ARDL model of unrecorded and recorded economies in Turkey," Journal of Economic Studies, Emerald Group Publishing, vol. 37(6), pages 627-646, November.
    2. Roberto Dell'Anno & Adalgiso Amendola, 2008. "Istituzioni, Diseguaglianza ed Economia Sommersa: quale relazione?," Quaderni DSEMS 24-2008, Dipartimento di Scienze Economiche, Matematiche e Statistiche, Universita' di Foggia.
    3. Maurizio Bovi & Peter Claeys, 2008. "Treasury V Dodgers. A Tale of Fiscal Consolidation and Tax Evasion," ISAE Working Papers 93 Classification-JEL E62, ISTAT - Italian National Institute of Statistics - (Rome, ITALY).
    4. Macias, Jose Brambila & Cazzavillan, Guido, 2009. "The dynamics of parallel economies. Measuring the informal sector in Mexico," Research in Economics, Elsevier, pages 189-199.
    5. Pablo Duarte, 2017. "The relationship between GDP and the size of the informal economy: empirical evidence for Spain," Empirical Economics, Springer, pages 1409-1421.
    6. Dan Andrews & Aida Caldera Sánchez & Åsa Johansson, 2011. "Towards a Better Understanding of the Informal Economy," OECD Economics Department Working Papers 873, OECD Publishing.
    7. Jos� Brambila Macias & Guido Cazzavillan, 2008. "The Dynamics of Parallel Economies. Measuring the Informal Sector in M�xico," Working Papers 2008_42, Department of Economics, University of Venice "Ca' Foscari".
    8. Feige, Edgar L., 2015. "Reflections on the meaning and measurement of Unobserved Economies: What do we really know about the “Shadow Economy”?," MPRA Paper 68466, University Library of Munich, Germany.
    9. Maurizio Bovi & Roy Cerqueti, 2014. "A quantitative view on policymakers’ goal, institutions and tax evasion," Quality & Quantity: International Journal of Methodology, Springer, pages 1493-1510.
    10. Lisi, Gaetano, 2010. "Occupazione irregolare e disoccupazione in Italia: un’analisi panel regionale
      [Underground Employment and Unemployment in Italy: A Panel Analysis]
      ," MPRA Paper 22508, University Library of Munich, Germany.
    11. Lisi, Gaetano, 2009. "Il lavoro irregolare in Italia: un'analisi panel regionale
      [Underground Employment in the Regions of Italy: A Panel Analysis]
      ," MPRA Paper 18525, University Library of Munich, Germany.
    12. Chan-Yuan Wong, 2016. "Evolutionary targeting for inclusive development," Journal of Evolutionary Economics, Springer, pages 291-316.

    More about this item

    Keywords

    Shadow economy; Multiple equilibria; Corruption; Taxation; Institutions; H26; K42; O17;

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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