Income Inequality, Corruption, and the Non-Observed Economy: A Global Perspective

  • E. Ahmed
  • J. B. RosserJr.
  • M. V. Rosser
Part of the New Economic Windows book series (NEW)


How large the non-observed economy (NOE) is and what determines its size in different countries and regions of the world is a question that has been and continues to be much studied by many observers (Schneider and Enste, 2000, 2002)2. The size of this sector in an economy has important ramifications. One is that it negatively affects the ability of a nation to collect taxes to support its public sector. The inability to provide public services can in turn lead more economic agents to move into the non-observed sector (Johnson, Kaufmann, and Shleifer, 1997). When such a sector is associated with criminal or corrupt activities it may undermine social capital and broader social cohesion (Putnam, 1993), which in turn may damage economic growth (Knack and Keefer, 1997; Zak and Knack, 2001). Furthermore, as international aid programs are tied to official measures of the size of economies, these can be distorted by wide variations in the relative sizes of the NOE across different countries, especially among the developing economies.


Social Capital Income Inequality Gini Coefficient Transition Economy Shadow Economy 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


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Copyright information

© Springer-Verlag Italia 2007

Authors and Affiliations

  • E. Ahmed
    • 1
  • J. B. RosserJr.
    • 2
  • M. V. Rosser
    • 2
  1. 1.James Madison UniversityHarrisonburgUSA
  2. 2.MSC 0204James Madison UniversityUSA

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