Abstract
The underground economy is a prevalent characteristic of nations all over the globe. This paper explores to which degree corruption, governance and quality of institutions influence the underground economy in Nigeria from the period of 1996–2020 using generalized method of moments (GMM) estimator. Generally as was observed, when all control variables were introduced institutional quality (INST) and unjust distribution of income (GIN) continued to show positive and significant relationship with underground economy. As such, this paper recommends that Nigeria’s government should strengthen its institutional environment and apply a combination of fiscal policy, and labour and financial market reforms to reduce economic inequality.
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