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http://dx.doi.org/10.13106/jafeb.2021.vol8.no11.0041

Unemployment and Shadow Economy in ASEAN Countries  

TRAN, Toan Khanh Pham (Graduate School, Ho Chi Minh City Open University)
Publication Information
The Journal of Asian Finance, Economics and Business / v.8, no.11, 2021 , pp. 41-46 More about this Journal
Abstract
The purpose of this study is to investigate the relationship between unemployment and shadow economy for 7 selected ASEAN countries using panel data from 2000-2017. This study uses a sample of 7 ASEAN countries including Cambodia, Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam covering the 2000-2017 period. The stationarity of the variables is determined by Pesaran panel unit-root tests. The Westerlund panel co-integration technique is used to examine the long-run relationship among the variables. In addition, dynamic ordinary least squares (DOLS) and fully modified ordinary least squares (FMOLS) methods are also employed. The DOLS and FMOLS results indicate that unemployment acts as an important driver for the increase in the shadow economy. In addition, the study results also reveal that GDP per capita has a negative impact on the shadow economy. Moreover, government expenditure, bank credit, and inflation are positively related to the shadow economy. The empirical results indicate that the size of the shadow economy is boosted by unemployment in the selected ASEAN economies. In addition, it is also evident that an increase of GDP per capita in the sample countries results in a lower shadow economy. Besides, government expenditure, bank credit, and inflation play a crucial role in the shadow economy.
Keywords
Unemployment; Shadow Economy; FMOLS; DOLS; ASEAN;
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