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Shadow Economy and Poverty

Author

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  • Nikopour, Hesam
  • Shah Habibullah, Muzafar

Abstract

This study attempts to investigate the relationship between shadow economy and poverty by explaining the mechanism through which shadow economy affects poverty via its impact on government size and economic growth, and using the human poverty index (HPI) for developing and developed countries. In order to achieve this objective, the three-way interaction model is utilized using data of 139 developing and 23 developed countries separately during 1999-2007. For developing countries the dynamic panel system GMM and for developed countries, the fixed and random effects method of estimation is used. The results suggest that increasing the shadow economy leads to increase poverty in developing countries while it decreases poverty in developed countries.

Suggested Citation

  • Nikopour, Hesam & Shah Habibullah, Muzafar, 2010. "Shadow Economy and Poverty," MPRA Paper 23599, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:23599
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    File URL: https://mpra.ub.uni-muenchen.de/23599/1/MPRA_paper_23599.pdf
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    References listed on IDEAS

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    Cited by:

    1. Alexis Papathanassis, 2016. "Combating Tourism-related Corruption: Effective Countermeasures Derived from Analysing Tourists’ Perceptions and Experiences," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 248-255, February.
    2. Yuriy Timofeyev, 2013. "The Effects of the Informal Sector on Income of the Poor in Russia," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 111(3), pages 855-866, May.
    3. Novkovska, Blagica, 2016. "How Strongly The Hidden Economy Of A Small Country Can Be Influenced By Drastic Events: Case Of Macedonia," UTMS Journal of Economics, University of Tourism and Management, Skopje, Macedonia, vol. 7(2), pages 187-195.

    More about this item

    Keywords

    Shadow economy; Poverty; Panel data analysis;

    JEL classification:

    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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