Property rights and shadow economies: A global perspective

초록

Many countries aim to reduce shadow economies due to the negative externalities they impose on society. This study examines the role of the property rights system and investigates how well-functioning property rights influence the underground economy from a multinational and multiperiod perspective. Employing two-way fixed effects and instrumental variable estimation, our findings confirm the prediction that the size of the shadow economy diminishes with the effectiveness of the property rights system. These results highlight the importance of establishing incentives for economic agents through the implementation of a robust private property system, which is essential for fostering both economic and social development. © (2024), (Economics Bulletin). All rights reserved.