Open Access Journal Article

Informality as a Driving Force for Corruption in Economy: A Neoclassical Simulation

by Emerson Abraham Jackson a,* orcid
a
Research Scholar, University of Birmingham and Bank of Sierra Leone, Freetown, Sierra Leone
*
Author to whom correspondence should be addressed.
EAL  2023 2(2):26; https://doi.org/10.58567/eal02020008
Received: 11 March 2023 / Accepted: 25 May 2023 / Published Online: 30 May 2023
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Abstract

This paper examines the link between informality and corruption, two interlinked phenomena that have negative impacts on economic development. The paper presents a neoclassical model simulation that illustrates how informality can drive corruption in the economy, emphasizing the incentives for corruption in an economy with informal and formal sectors. The model provides insights into the mechanisms that promote corruption and how policymakers can reduce it through formalisation. The paper reviews the existing literature on informality and corruption, highlighting the empirical evidence and theoretical models that support the relationship between the two. The research finds that countries with larger informal sectors tend to have higher levels of corruption. The study contributes to the ongoing debate on how to reduce corruption and promote formalisation, which are crucial for sustainable economic growth.

Keywords: Informality; Corruption; Neoclassical Model; Economic Development; Policy Implication;
Copyright: © 2023 by Jackson. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY) (Creative Commons Attribution 4.0 International License). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.

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ACS Style
Jackson, E. A. Informality as a Driving Force for Corruption in Economy: A Neoclassical Simulation. Economic Analysis Letters, 2023, 2, 26. https://doi.org/10.58567/eal02020008
AMA Style
Jackson E A. Informality as a Driving Force for Corruption in Economy: A Neoclassical Simulation. Economic Analysis Letters; 2023, 2(2):26. https://doi.org/10.58567/eal02020008
Chicago/Turabian Style
Jackson, Emerson A. 2023. "Informality as a Driving Force for Corruption in Economy: A Neoclassical Simulation" Economic Analysis Letters 2, no.2:26. https://doi.org/10.58567/eal02020008
APA style
Jackson, E. A. (2023). Informality as a Driving Force for Corruption in Economy: A Neoclassical Simulation. Economic Analysis Letters, 2(2), 26. https://doi.org/10.58567/eal02020008

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