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Shedding light on the shadow economy : a nighttime light approach


  • Tanaka, Kiyoyasu
  • Keola, Souknilanh


Measuring the shadow economy is inherently difficult, but critical for understanding economic development. Using census data on formal and informal sectors in Cambodia, we document that 96.6% of non-farm establishments do not formally register with the government, and their sales accounted for 76.6% of total sales in 2011. We estimate a relationship between nighttime light and sales across regions separately for formal and informal firms for 2011, and estimate their past sales from changes in nighttime light for 1993-2010. Both formal and informal firms increased their estimated sales, and the share of informal sales increased from 68.8% in 1993 to 76.6% in 2011, suggesting that the informal sector increased quantitatively in both absolute and relative terms throughout the economic development of the Cambodian economy.

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  • Tanaka, Kiyoyasu & Keola, Souknilanh, 2015. "Shedding light on the shadow economy : a nighttime light approach," IDE Discussion Papers 531, Institute of Developing Economies, Japan External Trade Organization(JETRO).
  • Handle: RePEc:jet:dpaper:dpaper531

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    References listed on IDEAS

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    Cited by:

    1. Tanaka, Kiyoyasu, 2017. "Trade and investment in Cambodia," IDE Discussion Papers 667, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    2. Keola, Souknilanh & Kumagai, Satoru, 2016. "Measuring population mobility speed from space," IDE Discussion Papers 574, Institute of Developing Economies, Japan External Trade Organization(JETRO).

    More about this item


    Cambodia; Employment; Informal sector; Informal employment; Satellite data;

    JEL classification:

    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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