Does the economic freedom hinder the underground economy? Evidence from a cross-country analysis.

We evaluate the impact that the economic freedom exerts on the shadow economy for a sample of 152 countries from 1995 to 2017. In order to solve endogeneity issues, we rely on an instrumental variable approach and find that a change in the economic freedom index, induced by the level of independence of financial markets from government actions, adversely affects the hidden economy. To corroborate the interpretation of our results we also show how each subcomponent of the economic freedom index explains the downward change registered in the shadow economy. Further, the negative effect is mainly found in countries characterized by a low level of democracy and strong corruption, whereas in more democratic and less corrupt countries the economic freedom positively affects the size of the shadow economy. Consistent with these findings, we also highlight that the effect of the composite indicator of economic freedom on the hidden economy is U-shaped and this relationship is exclusively driven by both business regulation and the freedom in the legal system and property rights.

Tax evasion and government size: evidence from Italian provinces.

We analyze the impact of government size, measured by total spending per capita, on tax evasion at the provincial level in Italy over the period 2001-2015. In order to solve endogeneity issues we rely on a system GMM and find that public expenditure negatively affects tax evasion, as taxpayers perceive the government is efficiently spending resources coming from the tax levy. Results are confirmed when we (1) consider expenditures related to long-term investments, namely capital spending per capita, and (2) directly test the impact of government efficiency on tax evasion. In addition, we show that the impact of public spending is heterogeneous across geographical areas: an increase in public expenditure leads to a downward shift in tax evasion only in the northern part of Italy, characterized by a relatively larger initial level of public goods provision.

Choice of dialysis treatment and type of medical unit (private vs public): application of a recursive bivariate probit.

ESRD patients have to deal with two choices: the first is related to the dialysis modality; the second concerns the type of dialysis unit (public vs private) where to undertake the treatment. Such a choice is related to unobservable factors, among which there might be patients' clinical factors as well as factors related to the characteristics of each unit. We employ a recursive bivariate probit estimation on a sample of ESRD Sicilian patients in order to evaluate the impact of these factors. Results can have important implications for Sicily in order to organize dialysis services: here, in fact, the number of private centres is higher than in other Italian Regions.