The Informal Economy in Sub-Saharan Africa: Size and Determinants
By Leandro Medina, Andrew Jonelis, M. Cangul. Social Science Research Network, 2017
200 citations recorded by the source corpus.
The multiple indicator-multiple cause (MIMIC) method is a well-established tool for measuring informal economic activity. However, it has been criticized because GDP is used both as a cause and indicator variable. To address this issue, this paper applies for the first time the light intensity approach (instead of GDP). It also uses the Predictive Mean Matching (PMM) method to estimate the size of the informal economy for Sub-Saharan African countries over 24 years. Results suggest that informal economy in Sub-Saharan Africa remains among the largest in the world, although this share has been very gradually declining. It also finds significant heterogeneity, with informality ranging from a low of 20 to 25 percent in Mauritius, South Africa and Namibia to a high of 50 to 65 percent in Benin, Tanzania and Nigeria.
Subfields: Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/f521719bf9b14ed17986a6ceb1b8eea608a585e2
How researchers see this paper
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In Economics and Econometrics
- Leandro Medina
- Friedrich Schneider
- Andreas Buehn
- Colin Williams
- James Alm
- C. E. Montenegro
- Axel Dreher
- Roberto Dell'Anno
Citations in the corpus
- Impact of COVID-19 on transportation in Lagos, Nigeria (2020, background): “Recognising the enormous informal economy of the state, accounting for approximately 65% of the economy (Medina et al., 2017).”
- Shadow Economies Around the World: New Results for 158 Countries Over 1991-2015 (2017, background): “Schneider and Enste (2002), Feld and Schneider (2010), Schneider, Buehn and Montenegro (2010), Schneider (2015), Schneider and Williams (2013), Williams and Schneider (2016).”
- Shedding Light on the Shadow Economy: A Global Database and the Interaction with the Official One (2019, methodology): “Therefore, by using the night lights approach we address MIMIC criticisms related to the endogeneity of GDP in a novel way, which is totally independent from problematic GDP measures traditionally used (See Medina et al. (2017)).”