Journal Article
What induces firms to subcontract to the informal sector? Evidence from a developing country
Autoren
Erscheinungsdatum
DOI
10.1080/13504851.2019.1612028
JEL Classification
L24
L67
H26
O53
Schlagworte
Innovation und Strukturwandel
Adding specific firm-level insights into the factors driving firms to subcontract operations to the informal sector, this article uses data from garment exporters in Pakistan. Nesting the analysis in the larger literature on the drivers of the shadow economy, we find that sole proprietorship ownership structure was more likely to subcontract underground, as were older entrepreneurs. On the other hand, older firms were less likely to subcontract underground. The effects of the entrepreneur’s education, firm size, input costs and overall economic prosperity, economic freedom and government stability were largely insignificant.
