A Matching Model of Endogenous Growth and Underground Firms
AbstractA matching model will explain both unemployment and economic growth by considering the underground sector and human capital. Three problems can thus be simultaneously accounted for: (i) the persistence of the underground sector, (ii) the ambiguous relationships between underground employment and unemployment, and (iii) between growth and unemployment. Key assumptions are that entrepreneurial ability is heterogeneous, skill accumulation determines productivity growth, job-seekers choose whether to invest in education. The conclusions are that the least able entrepreneurs, whose number is endogenous, set up underground firms, employ unskilled labour, and do not contribute to growth. If the monitoring rate is sufficiently low, underground employment alleviates unemployment, but the economy grows at lower rates.
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Bibliographic InfoPaper provided by Economics and Econometrics Research Institute (EERI), Brussels in its series EERI Research Paper Series with number EERI_RP_2012_03.
Date of creation: 03 Jan 2012
Date of revision:
Matching models; endogenous growth; underground economy; entrepreneurship; unemployment.;
Find related papers by JEL classification:
- E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
- J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-02-27 (All new papers)
- NEP-DGE-2012-02-27 (Dynamic General Equilibrium)
- NEP-ENT-2012-02-27 (Entrepreneurship)
- NEP-FDG-2012-02-27 (Financial Development & Growth)
- NEP-IUE-2012-02-27 (Informal & Underground Economics)
- NEP-LAB-2012-02-27 (Labour Economics)
- NEP-MAC-2012-02-27 (Macroeconomics)
You can help add them by filling out this form.
Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- A Matching Model of Endogenous Growth and Underground Firms
by Christian Zimmermann in NEP-DGE blog on 2012-02-29 04:38:31
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