Casting a long shadow? Cross-border spillovers of shadow economy across American states

Authors

Rajeev K. Goel, Illinois State UniversityFollow
James W. Saunoris, Eastern Michigan UniversityFollow

Document Type

Article

Publication Date

2016

Department

Economics

Abstract

This article examines the determinants of the shadow economy across American states, with emphasis on cross-border spillover effects. Results show positive spillovers of shadow activities across state borders with different specifications. In other effects, greater unionization in a state induces businesses to go underground, while states without a sales tax had a smaller shadow economy, ceteris paribus. Greater state product checked shadow growth, with military and nonmilitary state products having opposite effects. Finally, states bordering Canada and Mexico had different flows from the shadow sector.

DOI

10.1177/1091142115584815

Citation

Goel, R. K., & Saunoris, J. W. (2016). Casting a long shadow? Cross-border spillovers of shadow economy across American states. Public Finance Review, 44(5), 610–634. doi:10.1177/1091142115584815