Journal of Economics and Modelling

Journal of Economics and Modelling

The Impact of Knowledge Components on the Shadow Economy in Selected Developing Countries

Document Type : Original Article

Authors
Hossein Sghatforoosh 1
Abolfazl Shahabadi 2
Sima Eskandari Sabzi 3
1 Department of Economic Sciences, Mi.C., Islamic Azad University, Miyaneh, Iran
2 Professor of Economics, Faculty of Social Sciences and Economics, Alzahra University, Tehran, Iran
3 Assistant Professor of Economics, Department of Economic Sciences, Mi.C., Islamic Azad University, Miyaneh, Iran
10.48308/jem.2025.239929.2004
Abstract
The main objective of the present study is to examine the impact of knowledge components on the shadow economy in selected developing countries using the Panel Smooth Transition Regression model over the period 2008–2023. The results indicate that the effect of knowledge components on the shadow economy in these countries is asymmetric and nonlinear. Furthermore, according to the results, only in the upper and lower extreme regimes is there a significant and negative relationship between economic incentives and the institutional regime. The impact of other knowledge components on the shadow economy differs between the two extreme regimes. Specifically, the relationship between the innovation system and the shadow economy in these countries is insignificant in the lower extreme regime, but negative and significant in the upper extreme regime. The effect of education and human resource development on the shadow economy in the selected developing countries is negative and significant in the lower extreme regime, but positive and significant in the upper extreme regime. The influence of information and communication technology infrastructure on the shadow economy is negative and significant in the lower extreme regime, but insignificant in the upper extreme regime. Economic growth and natural resource rents have a positive and significant effect on the shadow economy in the lower extreme regime, but an insignificant effect in the upper extreme regime. In the lower extreme regime, the unemployment rate has a positive and significant impact on the shadow economy, whereas in the upper extreme regime, its effect on the shadow economy is insignificant.
Keywords
Economic Incentives
Shadow Economy
Human Capital
Information and Communication Technology
Subjects
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