Entrepreneurship, Corruption, and the Size of U.S. Underground Economies

Journal of Entrepreneurship and Public Policy, 2015, 4(3): 313-330

Posted: 17 Feb 2013 Last revised: 29 Oct 2015

See all articles by Travis Wiseman

Travis Wiseman

Mississippi State University - Department of Finance and Economics

Date Written: November 2, 2014

Abstract

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. Additionally, I aim to connect entrepreneurship, shadow economy size, and corruption by asking whether corruption affects entrepreneurial outcomes primarily through its effects on the shadow economy. I contend that if this is the case, then estimates of corruption should serve as a good instrument for shadow economy size in regressions on formal sector entrepreneurial outcomes.

Keywords: corruption, institutional quality, productive entrepreneurship, unproductive entrepreneurship, rent-seeking, shadow economy, U.S. states

JEL Classification: H71, K1, K4, L26, O10, O18, O51, R11

Suggested Citation

Wiseman, Travis, Entrepreneurship, Corruption, and the Size of U.S. Underground Economies (November 2, 2014). Journal of Entrepreneurship and Public Policy, 2015, 4(3): 313-330, Available at SSRN: https://ssrn.com/abstract=2219334 or http://dx.doi.org/10.2139/ssrn.2219334

Travis Wiseman (Contact Author)

Mississippi State University - Department of Finance and Economics ( email )

Mississippi State, MS 39762
United States

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