The devil is in the shadow: Do institutions affect income and productivity or only official income and official productivity?
This paper assesses the relationship between institutions, output, and productivity, when official output is corrected for the size of the shadow economy. Our results confirm the usual positive impact of institutional quality on official output and total factor productivity, and its negative impact on the size of the underground economy. However, once output is corrected for the shadow economy, the relationship between institutions and output becomes weaker. The impact of institutions on total (corrected) factor productivity even becomes insignificant. Differences in corrected output must then be attributed to differences in factor endowments. These results survive several tests for robustness.
Year of publication: |
2007
|
---|---|
Authors: | Dreher, Axel ; Méon, Pierre-Guillaume ; Schneider, Friedrich |
Publisher: |
Zurich : ETH Zurich, KOF Swiss Economic Institute |
Subject: | Schattenwirtschaft | Messung | Gesamtwirtschaftliche Produktion | Produktivität | Institutionalismus | Schätzung | Welt | shadow economy | income | aggregate productivity | development accounting |
Saved in:
freely available
Series: | KOF Working Papers ; 179 |
---|---|
Type of publication: | Book / Working Paper |
Type of publication (narrower categories): | Working Paper |
Language: | English |
Other identifiers: | 10.3929/ethz-a-005503049 [DOI] 582965969 [GVK] hdl:10419/50398 [Handle] |
Classification: | O11 - Macroeconomic Analyses of Economic Development ; O17 - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements ; O47 - Measurement of Economic Growth; Aggregate Productivity ; O5 - Economywide Country Studies |
Source: |
Persistent link: https://www.econbiz.de/10010277763