The devil is in the shadow

• Verfasst von: Dreher, Axel
• Verfasst von: Méon, Pierre-Guillaume
• Verfasst von: Schneider, Friedrich
• Titel: The devil is in the shadow
• Titelzusatz: do institutions affect income and productivity or only official income and official productivity?
• Verf.angabe: Axel Dreher, Pierre-Guillaume Méon and Friedrich Schneider
• Verlagsort: Zürich
• Verlag: KOF
• Jahr: 2007
• Gesamttitel/Reihe: KOF working papers / Konjunkturforschungsstelle, Eidgenössische Technische Hochschule Zürich ; 179
• Fussnoten: Erscheinungsjahr in Vorlageform:2007
• ComputerInfo: Acrobat Reader.
• ComputerInfo: Systemvoraussetzungen: Acrobat Reader.
• DOI: doi:10.3929/ethz-a-005503049
• Datenträger: Online-Ressource
• Sprache: eng
• (Umfang): Online-Ressource (PDF-Datei: 39 S., 401,18 KB)
• K10plus-PPN: 582965969

Abstract

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. -- shadow economy ; income ; aggregate productivity ; development accounting