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 heterogeneous workers in terms of moral. This facilitates an analysis of how wage setting and unemployment is affected by punishment policies, which is ignored in the previous literature.
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Paper provided by Uppsala University, Department of Economics in its series Working Paper Series with number
2001:9.
Length: 13 pages Date of creation: 16 Feb 2001 Date of revision: Handle: RePEc:hhs:uunewp:2001_009
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