Reciprocity, loyalty, and the growth of the underground-economy: A theoretical note |
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Authors: | Franz Haslinger |
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Abstract: | Taken the growth of the underground-economy for granted, this paper develops an explanation for its existence that is different from those usually provided. Presupposing a ‘generalized norm of reciprocity’ that guides the relationship between individuals and the state, it is argued that a reduction of certain payments from the government to individuals, e.g. in order lower budget deficits, may lead to an erosion of loyalty with possibly “catastrophical consequences” on overall economic activity: a situation that may ask for different policy measures than usually thought of as being appropriate. |
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