This paper offers a new theory of the corruption-shadow economy relationship: one that defines it as either collusive – i.e., crony – or non-collusive. Using new estimates of state-level shadow economy size, and data on corruption convictions of U.S. public officials for the 48 contiguous...

Using state-level data on productive and unproductive entrepreneurship, shadow economy size, and public official corruption, this paper examines whether formal sector productive (unproductive) entrepreneurial activity is associated with lower (higher) levels of informal economic activity....

Recent studies of shadow economies focus primarily on cross-country comparisons. Few have examined regional or state-level variations in underground economic activity. This paper presents estimates of the shadow economy for 50 U.S. states over the period 1997 to 2008. Results suggest that tax...