TY  - RPRT
        AU  - Wu, Dong Frank
AU  - Schneider, Friedrich
        TI  - Nonlinearity between the Shadow Economy and Level of Development
        PY  - 2019/May/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 12385
        UR  - https://www.iza.org/index.php/publications/dp12385
        AB  - This paper is the first attempt to directly explore the long-run nonlinearity of the shadow economy. Using a dataset of 158 countries over the period from 1996 to 2015, our results reveal a robust U-shaped relationship between the shadow economy size and GDP per capita. Our results imply that the shadow economy tends to increase when economic development surpasses a given threshold or at least does not disappear with economic growth. Our findings suggest that special attention should be given to the country's level of development when designing policies to tackle issues related to the shadow economy.
        KW  - shadow economy
KW  - level of development
KW  - nonlinearity
KW  - GDP per capita
        ER  -