Modelling the nexus between income inequality and shadow economy in Nigeria

Q3 Business, Management and Accounting

International Journal of Management and Enterprise Development Pub Date : 2022-08-09 DOI:10.20414/jed.v4i2.5486

S. B. Adegboyega, I. Odusanya, J. Ogede, F. Ajayi

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引用次数: 0

Abstract

Purpose — This paper aims to examine the relationship between the shadow economy and income inequality in Nigeria.Method — The paper employed Autoregressive Distributed Lag (ARDL), Fully Modified Ordinary Least Square (FMOLS), and Granger causality. This methodology is used to avoid endogeneity and heterogeneity in the model. This paper gauged income inequality using two diverse indicators of the Gini coefficient: the Gini index in proportion to household disposable income and the Gini index in proportion to household market income. In accordance with the literature, our empirical analysis draws on data from the Standardized World Income Inequality Database (SWIID), the World Bank, World Development Indicators, and the International Country Risk Guide (ICRG) for Nigeria from 1991 to 2018.Result — The findings of ARDL and FMOLS suggested a positive relationship between income inequality and the shadow economy, based on both measures of income inequality. In the short term, however, the shadow economy and income inequality are negatively correlated. Furthermore, we discovered a one-way causal relationship exists in Nigeria between the shadow economy, household disposable income, institutional democracy, household market income, and corruption control (CCI).Recommendation — Shadow economy has been regarded as an avenue to create job opportunities and raise poverty-income levels. It is critical that, for the shadow economy to reduce income inequality in Nigeria, policymakers should develop much better policies aimed at addressing income inequality.Contribution — In order to understand the relationship between income inequality and shadow economy activities in Nigeria, this study employed three methodologies, namely: Autoregressive Distributed Lags (ARDL), Fully Modified Ordinary Least Squares (FMOLS), and Granger Causality. The result offers reliable recommendations for pro-poor interventions that aim to limit the growth of informality via redistributing incomes.

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模拟尼日利亚收入不平等与影子经济之间的关系

目的-本文旨在研究尼日利亚影子经济与收入不平等之间的关系。方法:采用自回归分布滞后(ARDL)、完全修正普通最小二乘(FMOLS)和格兰杰因果关系。该方法用于避免模型的内生性和异质性。本文使用基尼系数的两个不同指标来衡量收入不平等:基尼指数与家庭可支配收入的比例和基尼指数与家庭市场收入的比例。根据文献，我们的实证分析利用了1991年至2018年尼日利亚的标准化世界收入不平等数据库(SWIID)、世界银行、世界发展指标和国际国家风险指南(ICRG)的数据。结果——ARDL和FMOLS的研究结果表明，基于收入不平等的两种衡量标准，收入不平等与影子经济之间存在正相关关系。然而，在短期内，影子经济与收入不平等呈负相关。此外，我们发现在尼日利亚影子经济、家庭可支配收入、制度民主、家庭市场收入和腐败控制(CCI)之间存在单向因果关系。建议:影子经济被认为是创造就业机会和提高贫困收入水平的途径。至关重要的是，为了让影子经济减少尼日利亚的收入不平等，政策制定者应该制定更好的政策来解决收入不平等问题。贡献-为了了解尼日利亚收入不平等与影子经济活动之间的关系，本研究采用了三种方法，即:自回归分布滞后(ARDL)、完全修正普通最小二乘(FMOLS)和格兰杰因果关系。研究结果为旨在通过收入再分配限制非正规行为增长的扶贫干预措施提供了可靠的建议。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

International Journal of Management and Enterprise Development Business, Management and Accounting-Business and International Management

CiteScore

1.80

自引率

0.00%

发文量

期刊介绍： IJMED is a major international research journal dedicated to business development strategy and entrepreneurship policy as well as management processes in an international and cross-cultural context. IJMED provides a venue for high quality papers including theoretical research articles, evidence-based case studies and practical applications seeking to explore best practice and investigate strategies for rapid growth management in SMEs. IJMED has a history of contributing to the academic literature, providing conceptual and practical insights and generating innovative ideas for organizational enterprise. Topics covered include: -SMEs'' start-up development, corporate venturing- Technological opportunities, new firm creation, valuation- Technological adoption, technology transfer, technopreneurship- Joint ventures/alliances, franchising and corporate ownership- Business incubator development strategy- Economic and social entrepreneurship- Virtual coaching services for SMEs- SMEs and entrepreneurship policy- Start-up cognitions/behaviours- Halo effect, technology licensing- Long-run technology investments- Knowledge management/technology strategy in SMEs- Managing rapid growth, accelerating competitive effectiveness- Strategy decision speed and SME performance- Entrepreneurs in non-profit sector.