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Which incentives have the strongest impact on the size of the shadow economy? Is it about government's pressure against entrepreneurs operating in this sector, or is it about the benefits of legality? The goal of this paper is to explicitly contrast the role of sticks (court repressiveness) and...
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Analyzing law enforcement data on corruption incidents for a panel of 79 Russian regions for the period 2004-2007, we … find that the relative salaries of bureaucrats determine corruption levels: Corruption declines as relative salaries rise … up to a turning point, beyond which corruption rises again. Other important determinants are the strength of law …
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