Informal employment and corruption: Differences across gender and industry

Abstract

AbstractThis paper adds to the literature studying the substitution and complementarity between corruption and the shadow economy by focusing on the differential effects of various informal employment categories, by gender (informal employment by men vs. women) and across industries (informal employment in the agriculture vs. non‐agriculture sectors). Using cross‐national data, we find evidence of complementarity between corruption and informal employment, after accounting for possible simultaneity. This complementarity holds across different informal employment categories, with some quantitative differences. These findings have policy relevance for the coordination of anti‐corruption and anti‐underground‐economy policies, and whether such policies should be sector specific.