Exploring the Dynamics Between Self-Employment and Shadow Economy in India; Granger Causality Analysis

This study investigates the relationship between informal employment and the shadow economy in India. Utilizing time series data spanning from 1991 to 2016, this study employs regression analysis to analyze the dynamics between these variables. While its primary objective is to examine the association between informal employment and the shadow economy, it also explore the relationship between self-employment and the shadow economy. Initial analyses focus on the computation of statistical measures such as mean, variance, and distribution characteristics. To address concerns of potential spurious regression outcomes, the study rigorously applies the Augmented Dickey-Fuller (ADF) test for stationarity verification. Findings of this study reveal significant correlations between informal employment, self-employment, and the shadow economy, shedding light on the complex interplay among these factors within India's economic landscape. This study contributes valuable insights to the existing literature, identifying key factors influencing the scale of informal employment and its impact on the shadow economy. This, in turn, offers significant implications for both policymakers and scholars in the field.