Relationship of the informal economy with unemployment and GDP per capita: A case of OECD and non-OECD economies

Abstract

The   current   study   explored   the   relationship   of   the   informal economy  with  unemployment  and  GDP  per  capita  for  the  year 2019.The  OECD  and  non-OECD  countriesused  in  the  study  to explore this relationship, and the total number of countries is 80. The application OLS method found an increase in GDP per capita will reduce the size of the informal economy but the unemployment rate  found  a  positive  association  with  the  informal  economy. Current  research  also  concludes  the  size  of  the  informal  sector should reduce to promote economic activities in the formal sector.