Driven underground by (mis)trust?

ABSTRACT

Studies have shown that economic and institutional variables are among the causes of underground activities. However, the effect of cultural variables such as trust on informality and, in particular, informal entrepreneurship, have been less explored. Using unique cross-national data, we study the influence of generalized trust on underground entrepreneurship. We find that nations with higher trust are associated with less informal entrepreneurship.

KEYWORDS:

• Generalized trust
• informal entrepreneurship
• cross-national data

JEL CLASSIFICATION:

• E26
• L26
• O17

Disclosure statement

No potential conflict of interest was reported by the authors.