Feb 28, 2012

Shadow economy


The graphs are from the paper "Inclusive Growth, Institutions, and the Underground Economy" by Singh, Jain-Chandra, Mohommad (2012). The authors conclude: "[I]nstitutions are a more important determinant of the size of the underground economy than tax rates." Compare this argument with Pickhardt and Jordi Sarda's in a another new paper (2012)
Contrary to most other studies, we show that the latter [the Spanish underground economy] is not predominantly caused by tax pressure, but by labor market aspects, macroeconomic influences and criminal activities. 

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