TITLE:
Governance, Corruption, and the Informal Economy
AUTHORS:
Idrissa M. Ouédraogo
KEYWORDS:
Informal Economy, Corruption, Governance, Sub-Saharan Africa
JOURNAL NAME:
Modern Economy,
Vol.8 No.2,
February
24,
2017
ABSTRACT: This paper uses data from 23 Sub-Saharan countries
to analyze the relationship between governance, corruption, and the size of the
informal economy. The results show that corruption, the quality of governance,
the quality of institutional settings, and the unemployment rates are major
determinants of the size of the informal economy. More specifically, it is
found that a high level of corruption and poor institutional settings favor an
increase of the informal economy. The unemployment rate is negatively related
to the size of the informal economy, and greater fiscal freedom and business
freedom are associated with a larger informal economy, while monetary freedom
reduces the size of the informal sector.