Does income inequality increase the shadow economy? Empirical evidence from Uganda

This paper applies the autoregressive distributed lag bounds testing method to investigate long- and short-run relationship between size of shadow economy income inequality in Uganda. The findings reveal evidence long inequality. We find that a rise significantly increases Uganda, all else equal. These results are robust use alternative econometric methods. At policy level, instituting redistribution policies uplift standard poor, improving resource allocation productive sectors economy, reforming tax system macroeconomic environment, implementing political institutional reforms address corruption could be viable options informality