The shadow economy (SE) represents a serious problem in many countries, especially in the developing world. The phenomenon can be defined as economic activities that escape detection in the official estimates of the Gross Domestic Product. Among others, the SE erodes the tax bases and reduces the tax revenue forcing the governments to find other sources of revenue to finance public spending.
The SE is a complex phenomenon with regards to its definition, measurement, potential impacts and causes. The purpose of this project is to investigate a possible role of digital government in reducing the SE. The implementation of eGov may allow the government to reduce the administrative burden costs, reduce tax evasion, and allow citizens to act as whistleblowers, all of which may eventually lower the size of the shadow activities.
The project aims to answers two main research questions. First, does the implementation of eGov policies contribute to the reduction of the SE? Second, is there a threshold point by which eGov development is more effective in reducing the SE? The analysis is carried out on a large panel of countries, at different levels of income and regions, mainly contrasting developed and developing countries.