Summary
The novelty of the present study is that this is the first attempt to estimate the size of the shadow economy using monthly data. The main purpose of this study is to investigates the effects of the labour force participation rate on the size of the shadow economy in Malaysia for the period January 2010 to December 2019. The robustness of the impact of labour force participation rate on shadow economy is tested using five different estimators. Other determinants of shadow economy included in this study is government expenditure, financial development, unemployment and lending rates.
