Government Size, Shadow Economy, Inequality of Income, Iran, Smooth Transition Regression (STR)

Document Type : Research Paper

Authors

1 Department of Economics, Faculty of Economics and Management, Urmia University, Urmia

2 Assistant Professor, Economic department, Economic and Management Faculty, Urmia University, Urmia

3 Assistant Professor, Department of Economics, Faculty of Economics and Management, Urmia University, Urmia

Abstract

This study investigates the relationship between shadow economy and inequality of income using smooth transition regression model (STR) as one of the most prominent regime switching models, over the period 1969 to 2015. To this end, we used the Consumption expenditure ratio to GDP as the government size variable and transition variable. Gini coefficient was used to measure income inequality and data on the shadow economy have been extracted using the MIMIC approach. Linearity test results indicate non-linear relationship between shadow economy and income inequality. The results show that the threshold level is 2.67% and estimated slope parameter is 8.20. In the first regime, shadow economy has a positive impact on income inequality, but the impact of the per capita income is negative and significant. In the second regime, shadow economy and per capita income have a different effect than income on inequality. In other words, with increasing government size, shadow economy has a negative impact on income inequality, but the impact of per capita income is positive.
JEL Classification: O17, D63, H11

Keywords

References

اسدزاده، احمد و جلیلی، زهرا (1394). اقتصاد سایه و نابرابری درآمدی در ایران. فصلنامه مدل‏سازی اقتصادی، 9(30)، 109-91.
خورسندی، مرتضی و عزیزی، زهرا (1391). ترکیب مصرف و اثرگذاری انرژی بر رشد اقتصادی: کاربردی از رگرسیون غیرخطی انتقال ملایم. فصلنامه اقتصاد محیط‏زیست و انرژی، 1(31)، 34-17.
رضازاده، علی و فتاحی، فهمیده (1396). تأثیر توسعه‌ی مالی بر اقتصاد سایه‌ای در ایران: رویکرد هم‌انباشتگی، با لحاظ شکست ساختاری،  تحقیقات اقتصادی، 52(3)، 639-619.
رضایی، اسعداله، حسین­زاده، جواد، فرامرزی، ایوب و یزدان­خواه، منصوره (1392). تأثیر اندازه دولت بر توزیع درآمد در ایران.  فصلنامه سیاست­های راهبردی و کلان، 1(4) 4، 36-21.
سازمان بین المللی کار (1383). کار شایسته و اقتصاد غیررسمی. ترجمه محمد ضیایی بیگدلی، تهران: پژوهشکده امور اقتصادی.
سرلک، احمد (1384)، اقتصاد زیرزمینی، مجله اطلاعات سیاسی-اقتصادی، 213و214 ، 163-154.
شهاب، محمدرضا و پژویان، جمشید (1394). ارتباط بین اقتصاد سایه­ای و رشد اقتصادی: یک تحلیل تجربی با  استفاده از سیستم معادله­های پنل همزمان. فصلنامه علوم اقتصادی، 9(3)، 28-1.
شهبازی، کیومرث و حسن­زاده، خدیجه (1395). نقش توسعه مالی در تأثیر تمرکز و ثبات بانکی بر ارزش افزوده بخش صنعت. فصلنامه پژوهش­ها و سیاست­های اقتصادی، 24(79)، 214-189.
عزیزی، زهرا (1397). بررسی عدم ثبات ضرایب در تابع واکنش مداخلات ارزی در اقتصاد ایران. فصلنامه پژوهش­ها و سیاست­های اقتصادی، 26(85)، 300-271.
مداح، مجید و فراهتی، محبوبه (1398)، تحلیل تجربی اثر مستقیم بیکاری بر اقتصاد سایه در ایران (رویکرد تقاضای پول)، تحقیقات اقتصادی، 54(2)، 441-419..
مداح، محمدرضا و محمدنیا سروی، زینب (1395). بررسی رابطه بین فساد اقتصادی، اقتصاد سایه­ای و آلودگی محیط زیست در کشورهای منتخب اوپک (رهیافت لیزرل). فصلنامه مقداری (بررسی­های اقتصادی سابق)، 13(4)، 18-1.
نادران، الیاس و صدیقی، حسن (1387). بررسی اثر مالیات­ها و اجزای آن بر حجم اقتصاد زیرزمینی در ایران (1351-1382)؛ مجله تحقیقات اقتصادی، 4(43)، 26-1.
Asimakopoulos, S., & Karavias, Y. (2016). The impact of government size on economic growth: A threshold analysis. Economics Letters, 139, 65-68.
Aslanidis, N., & Xepapadeas, A. (2006). Smooth transition pollution–income paths. Ecological Economics, 57(2), 182-189.
 Attia, S. M. (2009). The informal economy as an engine for poverty reduction and development in Egypt.
Bajada, C., & Schneider, F. (2005). The shadow economies of the Asia‐Pacific. Pacific Economic Review, 10(3), 379-401.
Benkraiem, R., Lahiani, A., Miloudi, A., & Shahbaz, M. (2019). The asymmetric role of shadow economy in the energy-growth nexus in Bolivia. Energy policy, 125, 405-417.
Capasso, S., & Jappelli, T. (2013). Financial development and the underground economy. Journal of Development Economics, 101, 167-178.
Chen, H., Hao, Y., Li, J., & Song, X. (2018). The impact of environmental regulation, shadow economy, and corruption on environmental quality: Theory and empirical evidence from China. Journal of Cleaner production, 195, 200-214.
Croitoru, L., & Sarraf, M. (2012). Benefits and costs of the informal sector: the case of brick kilns in Bangladesh. Journal of Environmental Protection, 3(6), 476-484.‏
Dell’Anno, R., & Davidescu, A. A. (2019). Estimating shadow economy and tax evasion in Romania. A comparison by different estimation approaches. Economic Analysis and Policy, 63, 130-149.
Dell’Anno, R. (2016). Analyzing the determinants of the shadow economy with a “separate approach”. An application of the relationship between inequality and the shadow economy. World Development, 84, 342-356.
Elveren, A. Y., & Özgür, G. (2016). The effect of informal economy on income inequality: Evidence from turkey. Panoeconomicus, 63(3), 293-312.
Escribano, A., & Jorda, O. (1999). Improved testing and specification of smooth transition regression models. In Nonlinear time series analysis of economic and financial data (pp. 289-319). Springer, Boston, MA.
Farzanegan, M. R., Hassan, M., & Badreldin, A. M. (2019). Economic liberalization in Egypt: A way to reduce the shadow economy?. Journal of Policy Modeling.
Farzanegan, M. R., & Habibpour, M. M. (2017). Resource rents distribution, income inequality and poverty in Iran. Energy Economics, 66, 35-42.
Gomis-Porqueras, P., Peralta-Alva, A., & Waller, C. (2014). The shadow economy as an equilibrium outcome. Journal of Economic Dynamics and Control, 41, 1-19.
González-Fernández, M., & González-Velasco, C. (2015). Analysis of the shadow economy in the Spanish regions. Journal of Policy Modeling, 37(6), 1049-1064.
Gregorio, J. D., & Lee, J. W. (2002). Education and income inequality: new evidence from cross‐country data. Review of income and wealth, 48(3), 395-416.
Gupta, S., Leruth, L., De Mello, L., & Chakravarti, S. (2003). Transition economies: how appropriate is the size and scope of government?. Comparative Economic Studies, 45(4), 554-576..
Kuznetsova, N. V., & Kuznetsova, E. V. (2015). Shadow economy as a self-adjustment of poverty and a signal from invisible hand. Asian Social Science, 11(5), 295.
Medina, L., & Schneider, F. (2018). Shadow economies around the world: what did we learn over the last 20 years?.1-76.
Oueslati, W., Zipperer, V., Rousselière, D., & Dimitropoulos, A. (2017). Energy taxes, reforms and income inequality: An empirical cross-country analysis. International Economics, 150, 80-95.
Psychoyios, D., Missiou, O., & Dergiades, T. (2019). Energy based estimation of the shadow economy: The role of governance quality. The Quarterly Review of Economics and Finance.
Romero, R. B. G. (2007). The Effects of Inequality on the Dynamics of the Informal Economy.
Schneider, F., & Enste, D. H. (2000). Shadow economies: size, causes, and consequences. Journal of economic literature, 38(1), 77-114.
Terasvirta, T. (2004). Smooth Transition Regression Modelling, in H. Lutkepohl and M. Kratzig (eds); Applied Time Series Econometrics.
Transparency International Organization (2019), report of Corruption Perceptions Index: https://www.transparency.org/cpi2018 
Valentini, E. (2007). Inequality and underground economy: A not so easy relationship. Università politecnica delle Marche.
World Economic Forum (2019), report of Global Competitiveness index. http://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf
Yap, W. W., Sarmidi, T., Shaari, A. H., & Said, F. F. (2018). Income inequality and shadow economy: a nonparametric and semiparametric analysis. Journal of Economic Studies. 45(3), 2-13.
Yu, T. H. K., Wang, D. H. M., & Chen, S. J. (2006). A fuzzy logic approach to modeling the underground economy in Taiwan. Physica A: Statistical Mechanics and its Applications, 362(2), 471-479.

Files

History

  • Receive Date: 04 December 2018
  • Revise Date: 31 December 2019
  • Accept Date: 13 May 2020

Share

How to cite

Statistics