Determinants of the informal economy: An Empirical Study on a group of developed and developing countries during the period (1999-2012)"

Research Abstract

The informal economy is one of the prevailing phenomena in both developed & developing countries. In order to control the continuous increasing in the informal economy's size, these countries must determine the most important factors affecting it. Therefore, the study aims to measure the determinants of the informal economy's size in both developed& developing countries using panel data models during the period 1999 to 2012. Estimation results show that there is a negative relationship between quality of institutions, economic growth, financial development, trade openness, and the informal economy's size in both developed & developing countries. The study also finds a positive relationship between corruption and the size of the informal economy. In addition, the results show that there is no significant statistical difference in the effects of economic growth and financial development on the informal economy's size in both developed& developing countries. In the other hand, the effects of quality of institutions and corruption on the informal economy's size is higher in developing countries and the opposite is found for the trade openness effect.

Research Keywords

Determinants of the informal economy: An Empirical Study on a group of developed and developing countries during the period (1999-2012)"