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The devil is in the shadow: do institutions affect income and productivity or only official income and official productivity?

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This paper assesses the relationship between institutions, output, and productivity, when official output is corrected for the size of the shadow economy. Our results confirm the usual positive impact of institutional quality on official output and total factor productivity, and its negative impact...

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Bibliographic Details
Main Authors: Dreher, Axel (Author) , Méon, Pierre-Guillaume (Author) , Schneider, Friedrich (Author)
Format: Book/Monograph Working Paper
Language:English
Published: Zürich KOF 2007
Series:KOF working papers / Konjunkturforschungsstelle, Eidgenössische Technische Hochschule Zürich 179
In: KOF working papers (179)

DOI:10.3929/ethz-a-005503049
Subjects:
2000
Arbeitspapier
Graue Literatur
Online Access:Verlag, kostenfrei, Volltext: http://e-collection.ethbib.ethz.ch/eserv/eth:29971/eth-29971-01.pdf
Verlag, kostenfrei, Volltext: http://www.kof.ethz.ch/publications/science/pdf/wp_179.pdf
Verlag, kostenfrei, Volltext: http://e-collection.ethbib.ethz.ch/view/eth:29971
Resolving-System, Volltext: http://hdl.handle.net/10419/50398
Resolving-System, Volltext: https://doi.org/10.3929/ethz-a-005503049
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Author Notes:Axel Dreher, Pierre-Guillaume Méon and Friedrich Schneider
Description
Summary:This paper assesses the relationship between institutions, output, and productivity, when official output is corrected for the size of the shadow economy. Our results confirm the usual positive impact of institutional quality on official output and total factor productivity, and its negative impact on the size of the underground economy. However, once output is corrected for the shadow economy, the relationship between institutions and output becomes weaker. The impact of institutions on total ("corrected") factor productivity even becomes insignificant. Differences in corrected output must then be attributed to differences in factor endowments. These results survive several tests for robustness. -- shadow economy ; income ; aggregate productivity ; development accounting
Item Description:Erscheinungsjahr in Vorlageform:2007
Physical Description:Online Resource
Format:Acrobat Reader.
Systemvoraussetzungen: Acrobat Reader.
DOI:10.3929/ethz-a-005503049

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