Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/76468
Authors: 
Anderberg, Dan
Year of Publication: 
2003
Series/Report no.: 
CESifo Working Paper 1048
Abstract: 
This paper considers whether labour market rigidities lead to more underground economic activities. This is suggested by aggregate cross-country data which show that underground economic activities are more strongly correlated with a commonly used index of employment protection than with effective tax rates. A simple theoretical model is constructed to support this finding. The model, contrary to many models of equilibrium unemployment in the literature, also has the feature that a rise in a proportional tax affects employment (in addition to underground economic activities).
Document Type: 
Working Paper

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