The Effect of Informal Economic activities on Air Pollution Index (Environmental Kuznets Curve Estimation)

Subject Areas : environmental management

Amir Hossein Mozayani ¹ , Niloofar Morad hasel ²

1 - PhD in Economics, Assistant Professor of Tarbiat Modares University
2 - PhD in Economics, Assistant Professor of Research Institute for ICT

Received: 2009-07-27 Accepted : 2009-12-23 Published : 2014-09-23

Keywords: Informal economy, Environmental quality, Kuznets Hypothesis, Panel data, cross Country Study,

Abstract :

Decomposition of economic activities to formal and informal, the formal activities are those whichmonitored by official data and on the other hand the informal economic activities are those that aren'treflected through official statistics. They aren't transparent as much to be traced by authorities in spitetheir considerable volume. One of the main reasons that economic agents prefer to transform theirbusiness to informal part of economy is to avoid regulations such as: tax, duties, standards and etc.One of the main features of these regulations is environmental consideration (e.g. environmental taxand standards) which is sensibly important for industries. Especially for pollutant ones which areusually behave unofficially and their activities have much more degrading effects on environment.We are to study the effect of informal economic activities on environmental quality a cross countryapproach. We used a basic Kuznets model through panel data technique for 140 countries. The resultimplies a considerable impact of informal activities on environment not only in high income countriesbut in low and middle ones.

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