Shadow Economy And Poverty In Algeria: Evidence From Empirical Study

Abstract

This study attempts to investigate the relationship between shadow economy and poverty by designing the mechanism through which shadow economy affects poverty via its impacts on economic growth. The results suggest that increasing the shadow economy leads to increase poverty in developing countries. So time series of data collected for Algeria from 1991 to 2015 in order to examine this relationship. To reach this target, GMM model was used with one- interaction. The findings of the study show that both of economic growth and the shadow economy have weakly impact on poverty statistically negative and significant. This result is mainly explained by the inefficient of public investment and the size of government consumption.