Moral Costs, The Informal Sector And Unemployment

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Moral Costs, The Informal Sector And Unemployment

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Kolm, Ann-Sofie (Uppsala University)
Larsen, Birthe (Department of Economics, Copenhagen Business School)

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Ann-Sofie Kolm

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.

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Paper provided by Copenhagen Business School, Department of Economics in its series Working Papers with number 01-2001.

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Length: 18 pages
Date of creation: 22 Jan 2001
Date of revision:
Handle: RePEc:hhs:cbsnow:2001_001

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Postal: Department of Economics, Copenhagen Business School, Solbjerg Plads 3 C, 5. sal, DK-2000 Frederiksberg, Denmark
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Fax: 38 15 26 65
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Find related papers by JEL classification:
E20 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution

This paper has been announced in the following NEP Reports:

NEP-ALL-2001-05-16 (All new papers)

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Kolm, Anne-Sofie & Larsen, Birthe, 2003. "Wages, unemployment, and the underground economy," Working Papers 11-2003, Copenhagen Business School, Department of Economics. [Downloadable!]
Other versions:
- Kolm, Ann-Sofie & Larsen, Birthe, 2001. "Wages, Unemployment, and the Underground Economy," Working Paper Series 2001:8, Uppsala University, Department of Economics. [Downloadable!]
- Ann-Sofie Kolm & Birthe Larsen, 2003. "Wages, Unemployment, and the Underground Economy," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
- Kolm, A.S. & Larsen, B., 2001. "Wages, Unemployment, and the Underground Economy," Papers 2001:08, Uppsala - Working Paper Series.
Bosch, Mariano & Maloney, William F., 2008. "Cyclical Movements in Unemployment and Informality in Developing Countries," IZA Discussion Papers 3514, Institute for the Study of Labor (IZA). [Downloadable!]
Bosch, Mariano & Maloney, William, 2008. "Cyclical movements in unemployment and informality in developing countries," Policy Research Working Paper Series 4648, The World Bank. [Downloadable!]
Kolm, Ann-Sofie & Larsen, Birthe, 2001. "Moral, the Informal Sector, and Unemployment," Working Paper Series 2001:9, Uppsala University, Department of Economics. [Downloadable!]
Other versions:
- Kolm, A.S. & Larsen, B., 2001. "Moral, The Informal Sector, and Unemployment," Papers 2001:09, Uppsala - Working Paper Series.

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