Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/76501
Authors: 
Kolm, Ann-Sofie
Larsen, Birthe
Year of Publication: 
2003
Series/Report no.: 
CESifo Working Paper 1086
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. Workers search for jobs in both the formal and the informal sector. We analyse the impact of higher punishment rates and a higher audit rate on labour market performance. We find that a higher punishment rate reduces the size of the informal sector and reduces unemployment. A higher audit rate has an ambiguous impact on unemployment, and may actually increase the size of the underground economy.
Subjects: 
tax evasion
underground economy
matching
bargaining
unemployment
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.