Shadow economy and national culture: A spatial approach

Abstract

This paper seeks to contribute to the empirical evidence on existing estimations of the factors participating in shadow economy. The estimations correspond to the period 1999-2015, with a sample of 82 countries. The paper examines the effect of the Hofstede cultural variables, along with other socioeconomic factors on the shadow economy, and incorporates the spatial variable as an additional explanatory variable. The estimation carried out as a novelty uses a panel model that incorporates the spatial filter technique. Our study confirms that national culture and how developed a country is are significant factors in explaining the different levels of shadow economies.