CORRUPTION AND THE SHADOW ECONOMY
This article develops a simple framework for analyzing the links between corruption and the unofficial economy and their implications for the official economy. In a model of self-selection with heterogeneous entrepreneurs, we show that the entrepreneurs' option to flee to the underground econom...
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| Veröffentlicht in: | International economic review (Philadelphia) 2005-08, Vol.46 (3), p.817-836 |
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| container_title | International economic review (Philadelphia) |
| container_volume | 46 |
| creator | Choi, Jay Pil Thum, Marcel |
| description | This article develops a simple framework for analyzing the links between corruption and the unofficial economy and their implications for the official economy. In a model of self-selection with heterogeneous entrepreneurs, we show that the entrepreneurs' option to flee to the underground economy constrains a corrupt official's ability to introduce distortions to the economy for private gains. The unofficial economy thus mitigates government-induced distortions and, as a result, leads to enhanced economic activities in the official sector. In this sense, the presence of the unofficial sector acts as a complement to the official economy instead of as a substitute. |
| doi_str_mv | 10.1111/j.1468-2354.2005.00347.x |
| format | Article |
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| ispartof | International economic review (Philadelphia), 2005-08, Vol.46 (3), p.817-836 |
| issn | 0020-6598 1468-2354 |
| language | eng |
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| source | Jstor Complete Legacy; Wiley Online Library Journals Frontfile Complete; Business Source Complete |
| subjects | Bribery Corruption Corruption in government Economic activity Economic analysis Economic modeling Economic models Economic policy Economic sectors Economics Entrepreneurs Government corruption Informal economy Informal sector Profit Public goods Studies Underground economies |
| title | CORRUPTION AND THE SHADOW ECONOMY |
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