TY - RPRT AU - Buehn, Andreas AU - Schneider, Friedrich TI - Corruption and the Shadow Economy: A Structural Equation Model Approach PY - 2009/May/ PB - Institute of Labor Economics (IZA) CY - Bonn T2 - IZA Discussion Paper IS - 4182 UR - https://www.iza.org/index.php/publications/dp4182 AB - The relationship between corruption and the shadow economy is not clear. Theoretically, they either substitute or complement each other – exhibiting either a negative or positive relationship. This paper – using a structural equation model with two latent variables – extracts information on various dimensions of corruption and the shadow economy to contribute to the debate on their relationship. It presents empirical evidence of a positive relationship between the shadow economy and corruption. The results show that the shadow economy influences corruption more than corruption influences the shadow economy. KW - shadow economy KW - corruption KW - SEM models ER -