The Impact of Globalization on the Shadow Economy in OECD Countries: Evidence from Method of Moments Quantile Regression

The current research investigates the effect of globalization on the shadow economy in OECD countries while considering the role of income, vulnerable employment, inflation, and trade openness for the period 1996 - 2018. Considering the possibility that the impact of independent variables may vary throughout the distribution of the shadow economy, the correlations between the variables are studied by the method of moments quantile regression with fixed effects. The results show that the increase in globalization and income decreases the shadow economy size, while the increase in vulnerable employment, inflation, and trade openness increases the level of the shadow economy.