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- Title
Staying in the shadow or not? Remittances and the Shadow Economy.
- Authors
Choi, Hongbi; Moon, Chungshik
- Abstract
Objective: This study investigates the impact of remittances on the shadow economy and how domestic institutions, particularly property rights, moderate this relationship. Methods: We employed a quantitative research method using panel data from developing countries from 1990 to 2018. We adopted both fixed‐effects and instrumental variable approaches to address possible endogeneity concerns between remittances and the shadow economy. Results: The results demonstrate that remittances are positively associated with the shadow economy's size. However, this positive effect is weaker in countries with strong property rights institutions. These findings remain robust across alternative measures of key variables and estimation techniques. Conclusion: The results suggest that foreign income in the form of remittances is an important determinant of the shadow economy in recipient countries. We believe that exploring the relationship between foreign sources of income and the decisions of economic actors to enter specific sectors warrants further investigation.
- Subjects
INFORMAL sector; REMITTANCES; ECONOMIES of scale; QUANTITATIVE research; PANEL analysis; PROPERTY rights
- Publication
Social Science Quarterly (Wiley-Blackwell), 2024, Vol 105, Issue 3, p682
- ISSN
0038-4941
- Publication type
Article
- DOI
10.1111/ssqu.13358