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Abstract

Relying on the non-negligible role played by the underground economy in the labour market fluctuations, this paper extends the standard matching model à la Mortensen-Pissarides by introducing an underground sector along with an endogenous sector choice for both entrepreneurs and workers. These modifications improve the quantitative properties of the standard matching model, thus providing a possible explanation for the unemployment volatility puzzle.

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Bibliographic Info

Article provided by Spiru Haret University, Faculty of Financial Management and Accounting Craiova in its journal Journal of Applied Economic Sciences.

Volume (Year): 5 (2010)
Issue (Month): 2(12)/Summer2010 ()
Pages: 59-69

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Handle: RePEc:ush:jaessh:v:5:y:2010:i:2(12)_spring2010:p:101

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Web page: http://www2.spiruharet.ro/facultati/facultate.php?id=14
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Related research

Keywords: unemployment and vacancies volatility; productivity and job destruction shocks; underground economy; shadow economy; hidden economy; matching models;

Other versions of this item:

Find related papers by JEL classification:

• E26 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
• E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
• J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
• J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
• J63 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Turnover; Vacancies; Layoffs
• J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

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17. repec:ebl:ecbull:v:10:y:2007:i:13:p:1-11 is not listed on IDEAS
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:

1. The unemployment volatility puzzle: the role of the underground economy
   by Christian Zimmermann in NEP-DGE blog on 2010-05-26 17:46:21

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Cited by:

1. Oleg Kitov & Ivan Kitov, 2011. "Inflation and unemployment in Switzerland: from 1970 to 2050," Papers 1102.5405, arXiv.org.
   
   • Kitov, Oleg & Kitov, Ivan, 2011. "Inflation and unemployment in Switzerland: from 1970 to 2050," MPRA Paper 28887, University Library of Munich, Germany.

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