Ricerc@Sapienza

The size of the informal economy (IE), as a percentage of official GDP, is increased over the last thirty years with a huge heterogeneity across countries. The literature focusing on the main drivers of IE include some fiscal and economic aspects as well as institutional elements. Among them, the role of social progress has not been properly considered. Countries with higher social progress experience better and higher education, increased access to service, reduced rates of poverty. More importantly, social progress favours civil society organizations, also enhancing transparency and citizens' participation to the policy-decision making. Thus, it enables individuals to increase awareness about the repercussion of illegal activities and deter them from carrying out those activities that can hamper economic development. This poses the question of whether social progress can be considered as a strategic tool to reduce the size of informal economy. The aim of this project is investigating the role of social progress, which encompasses by definition both economic and cultural aspects, as a specific determinant of IE. Exploring this nexus is compelling as it may provide insights that are relevant from a policy perspective. An open challenge concerns the design of the "right" indicator for social progress. It seems to be an utopic goal requiring the joint contributions of social scientists from different disciplines, involving difficult ethical issues. In this project, we measure social progress by using the Human Development Index (HDI) provided by the United Nations. It allows a worldwide geographical coverage and a comprehensive well-being definition including income, health and education dimensions, which represent the key elements of social progress identified by the Sustainable Development Goals. This research emphasises the multidimensional nature of social progress by exploiting the informational power of the HDI and studying the impact of its components on IE.