Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/152372
Authors: 
Kolm, Ann-Sofie
Larsen, Birthe
Year of Publication: 
2016
Citation: 
[Journal:] IZA Journal of Labor Economics [ISSN:] 2193-8997 [Volume:] 5 [Year:] 2016 [Issue:] 8 [Pages:] 1-36
Abstract: 
This paper develops a four-sector equilibrium search and matching model with informal sector employment opportunities and educational choice. We show that underground activities reduce educational attainments if informal employment opportunities mainly are available for low-educated workers. A more zealous enforcement policy will in this case improve educational incentives as it reduces the attractiveness of remaining a low-educated worker. However, unemployment also increases. Characterizing the optimal enforcement policies, we find that relatively more audits should be targeted towards the sector employing low-educated workers; elsewise, a too low stock of educated workers is materialized.
Subjects: 
Tax evasion
The informal sector
Education
Matching
Unemployment
JEL: 
H26
I21
J64
Persistent Identifier of the first edition: 
Creative Commons License: 
http://creativecommons.org/licenses/by/4.0/
Document Type: 
Article
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