Internet usage and the shadow economy: Evidence from panel data

► First paper linking internet usage to shadow economy. ► GDP per capita strongly interacts with this link. ► Results hold both for the whole dataset and subset with MENA countries. The enormous spread of the internet in the last 20 years has been having various economic consequences. In this paper...

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Bibliographic Details
Published in:Economic systems 2013-03, Vol.37 (1), p.111-121
Main Author: Elgin, Ceyhun
Format: Article
Language:English
Subjects:
GDP
Gross Domestic Product
Internet
Internet usage
Panel-data
Shadow economy
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Summary:► First paper linking internet usage to shadow economy. ► GDP per capita strongly interacts with this link. ► Results hold both for the whole dataset and subset with MENA countries. The enormous spread of the internet in the last 20 years has been having various economic consequences. In this paper I ask whether the spread of the internet aided or abetted the shadow economy. To this end, using a panel data of 152 countries over 9 years from 1999 to 2007, I examine the empirical relationship between the degree of internet usage and the size of the shadow economy. Panel and cross-section estimation results indicate that the association between internet usage and shadow economy size strongly interacts with GDP per-capita. I also suggest and then empirically test an economic mechanism to account for this observation.
ISSN:0939-3625
1878-5433
DOI:10.1016/j.ecosys.2012.08.005