Essays on Shadow Economies in Latin America

This books investigates the determinants of the shadow (or informal) economy in Latin American countries, stressing the role played by labor market variables and by gender. The book covers several topics that have received scant attention in the literature, such as associations between the shadow economy with: income inequality; national savings ratio; economic instability; and the Keynesian multiplier. It presents the shadow economy in the context of catastrophe theory. Additionally, the book analyzes the determinants of trust in people, showing that trust is positively associated with the national coverage of social services and increases in quality employment. The role that the shadow economy plays in creating personal trust, personal happiness, and violence is also analyzed. The results suggest the shadow economy and low levels of trust existing in the Latin American countries are reflections of their low levels of social mobility, which is a result of deficient taxation that constrains public spending on social services.