Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/208441 
Year of Publication: 
2001
Series/Report no.: 
Working paper No. 1-2001
Publisher: 
Copenhagen Business School (CBS), Department of Economics, Frederiksberg
Abstract: 
While examining the macroeconomic effects of increased government control of the informal sector, this paper develops a two-sector general equilibrium model featuring matching frictions and worker-firm wage bargaining. The same good is produced in the formal and in the informal sector. Moral considerations are determinant for whether the worker search for jobs in the formal or in the informal sector. We analyse the impact of higher punishment fees and a higher audit rate on wages, sector division, unemployment and welfare.
Subjects: 
Employment
Unemployment
Wages
Macroeconomics
JEL: 
E20
E24
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper

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