Informality, Inequality and ICT in Transition economies

Solomon, H. and Dell'Anno, R. 2014. Informality, Inequality and ICT in Transition economies. Eastern European Economics. 52 (5), pp. 3-31. doi:10.1080/001287755.2014.1004264

TitleInformality, Inequality and ICT in Transition economies
TypeJournal article
AuthorsSolomon, H. and Dell'Anno, R.
Abstract

In this paper, we examine the role of the quality of institutional infrastructure and information and communication technology (ICT) in the relationship between the size of the informal sector (IS) and income inequality. Following our results, the sign of the relationship between IS and income inequality depends on the quality of institutions. When institutions are weak, agents invest less human capital and ICT in the formal sector (FS), thereby reducing income inequality. Utilizing panel data for sixteen transition countries we show that the relationship between the size of the IS and the level of income inequality is ambiguous. Our findings highlight the problem of measuring the relative size of the IS which is a hidden entity. We control for robustness of our findings using alternative proxies of ICT, human capital, and institutional quality and some interaction terms among these variables.

KeywordsFiring cost, Informal sector, Tax burden, Unemployment, Labor regulation, Shadow Economy
JournalEastern European Economics
Journal citation52 (5), pp. 3-31
ISSN0012-8775
Year2014
PublisherTaylor & Francis
Accepted author manuscript
Digital Object Identifier (DOI)doi:10.1080/001287755.2014.1004264
Web address (URL)https://www.tandfonline.com/doi/abs/10.1080/001287755.2014.1004264
Publication dates
Published08 Apr 2015

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