Abstract

Fighting against the invisible hand of corruption and reducing levels of informal economy have progressively become critical targets in many governments’ political agendas, as the adverse effects of illegal business practices have been widely recognised in policymakers’ discussion as well as in academic research. The past decade has witnessed a boom in the empirical economic literature on causes and consequences of corruption and shadow economy.

In this context, the objective of our study is to analyse: (1) Why some enterprises are more likely to incline towards corruption and/or non-compliance with certain regulations than others? (2) Why and when some shadow entrepreneurs decide to go formal? and (3) What is the relationship between corruption and other forms of non-compliance?

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