Article
Are Shadow Economy and Corruption in US States Substitutive or Complementary? An Empirical Investigation
Sosyoekonomi
(2020)
Abstract
An empirical investigation of the 50 US States shows that the relationship between shadow economy and corruption is negative (substitutive) when the shadow economy is relatively small; it is positive (complementary) when the shadow economy is large. According to the robust regression results for 50 American states between 2001 and 2008, the turning point from negative to positive is when the shadow economy of a state is at 7.61 of its GDP. Shadow economy and corruption are first substitutive and then complementary. The lesson to learn is that there is no simple anti-corruption policy rule if one takes into account the varying interaction between corruption and the shadow economy.
Keywords
- Shadow Economy,
- Corruption,
- USA
Disciplines
Publication Date
August, 2020
DOI
10.17233/sosyoekonomi.2020.04.01
Citation Information
Omer Gokcekus and Friedrich Schneider. "Are Shadow Economy and Corruption in US States Substitutive or Complementary? An Empirical Investigation" Sosyoekonomi Vol. 28 Iss. 46 (2020) p. 11 - 23 ISSN: 1305-5577 Available at: http://works.bepress.com/omer_gokcekus/58/