Digitalization and the Shadow Economy: Impact Assessment and Policy Implications for EU Countries

ABSTRACT

This paper examines whether the digital transformation, proxied, by large-scale adoption and use of digital technologies, as well as ongoing improvements in the quality of ICT technologies, is leads into lowering the size of the informal economy. Our contribution to the literature is both empirical and practical, by considering a broad and novel range of indicators that are related to three components of the Digital Compass. Using a panel regression framework, findings indicate that the impact of digital technologies on the size of shadow economy is transmitted through both the usage and quality channels.

KEYWORDS:

• Shadow economy
• digital technology
• digital indicators
• panel regression

JEL CLASSIFICATION:

• E26
• O17
• O00

Disclosure Statement

No potential conflict of interest was reported by the author(s).

Notes

1. https://ec.europa.eu/eurostat/, accessed on 31.08.2021.

2. The indicator targets all enterprises, without those in the financial sector, with at least 10 employees.

3. https://ec.europa.eu/eurostat/, accessed on 31.08.2021.

4. https://www.imd.org/, accessed on 30.08.2021.

5. https://www.wipo.int/, accessed on 06.09.2021.

6. https://ec.europa.eu/eurostat/, accessed on 09.09.2021.

7. https://data.worldbank.org, accessed on 02.08.2021.

8. https://www.imf.org/en/Home, accessed on 03.09.2021.

9. https://www.imf.org/en/home, accessed on 03.09.2021.

Additional information

Notes on contributors

Iustina Alina Boitan

Iustina Alina Boitan is Professor at the Bucharest University of Economic Studies (Romania), Faculty of Finance and Banking, Department of Money and Banking. She is member of the Financial and Monetary Research Center. Her research interests comprise: financial regulation and supervision, banking system issues, quantitative statistical methods, ethical banks, national promotional banks, crowdfunding, social and financial inclusion, sustainable development, climate change.

Sorina Emanuela Ștefoni

Sorina Emanuela Ștefoni is a PhD student at the Doctoral School of Finance within Bucharest University of Economic Studies, Romania and a lawyer specialized in finance and banking. With a double academic background, being a graduate of both law school and finance and banking school, she is interested in exploring the economic problems that countries are experiencing and how they can be subsequently assessed and managed by adopting reliable and appropriate tools and solutions.