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On the effects of e-participation on shadow economy: a worldwide empirical analysis

  • Agnese Sacchi ORCID logo , Raffaella Santolini ORCID logo EMAIL logo and Friedrich Schneider
Published/Copyright: February 2, 2022

Abstract

This paper explores the relationship between the e-participation attitude of citizens and the size of the shadow economy, whose consequences could be detrimental to countries’ economic development. We exploit a rich panel dataset for 149 countries characterized by a large digital divide within their public sectors, different levels of both income and democratic institutions at work over years 2003–2015. Using the instrumental variables approach to address potential endogeneity issues, we find that e-participation significantly contributes to reducing the shadow economy. Due to its interactive nature for both businesses and citizens, it positively affects the individuals’ behavior against informal economic activities by creating a more collaborative environment between the government and its stakeholders.

JEL Classification: E26; O17; O38; O57

Funding statement: This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors.

Acknowledgment

We are very grateful to the Editor and two anonymous referees for their valuable remarks. We would like to thank Erika Kraemer Mbula and the participants in the 7th International Conference on “The Shadow Economy, Tax Behaviour and Institutions” at the Brunel University of London for their helpful comments. A special thank is due to Matteo Picchio for his useful suggestions.

  1. Conflict of interest: None.

Appendix A
Table A.1

Correlation matrix, independent variables.

Epart density women GDPcgr econflow infl pop65 socglob fiscfree busfree rulelaw judind UM-H income dem
Epart 1
density 0.188 1
female −0.004 −0.054 1
GDPcgr −0.097 0.012 0.126 1
econflow 0.340 0.182 −0.048 −0.077 1
infl −0.167 −0.058 0.049 0.092 −0.231 1
pop65 0.517 0.041 0.351 −0.033 0.435 −0.188 1
socglob 0.579 0.177 −0.075 −0.144 0.603 −0.301 0.761 1
fiscfree −0.167 0.102 −0.321 0.094 −0.125 0.114 −0.375 −0.197 1
busfree 0.532 0.209 0.020 −0.121 0.505 −0.224 0.574 0.693 −0.139 1
rulelaw 0.560 0.185 −0.036 −0.114 0.558 −0.314 0.672 0.815 −0.328 0.758 1
judind 0.424 −0.030 0.210 −0.086 0.387 −0.257 0.597 0.578 −0.430 0.573 0.772 1
UMH income 0.467 0.106 −0.119 −0.168 0.545 −0.164 0.576 0.758 −0.088 0.590 0.655 0.454 1
dem 0.301 −0.085 0.293 −0.020 0.224 −0.157 0.492 0.378 −0.243 0.343 0.472 0.671 0.309 1

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Published Online: 2022-02-02
Published in Print: 2022-08-31

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