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Unemployment, underground economy and economic growth in a matching model of behavioural economics

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  • Gaetano Lisi

    () (University of Cassino and Southern Lazio)

Abstract

Abstract The main aim of this theoretical paper was to show that a matching model of behavioural economics is able to shed light on important and intricate economic relationships such as those among unemployment, underground economy and growth. Precisely, it will show that in a trustful society the underground economy and unemployment are low and growth is high, whereas in a distrustful society the underground economy is high, unemployment is reduced only in the short run, and long-run growth is low.

Suggested Citation

  • Gaetano Lisi, 2016. "Unemployment, underground economy and economic growth in a matching model of behavioural economics," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 63(2), pages 159-170, June.
  • Handle: RePEc:spr:inrvec:v:63:y:2016:i:2:d:10.1007_s12232-015-0247-7
    DOI: 10.1007/s12232-015-0247-7
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    References listed on IDEAS

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    1. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877.
    2. McFadden, Daniel, 1999. "Rationality for Economists?," Journal of Risk and Uncertainty, Springer, vol. 19(1-3), pages 73-105, December.
    3. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 83-116.
    4. Tito Boeri & Pietro Garibaldi, 2005. "Shadow Sorting," NBER Chapters,in: NBER International Seminar on Macroeconomics 2005, pages 125-163 National Bureau of Economic Research, Inc.
    5. Stephan Muehlbacher & Erich Kirchler, 2010. "Tax Compliance by Trust and Power of Authorities," International Economic Journal, Taylor & Francis Journals, vol. 24(4), pages 607-610.
    6. Philippe Aghion & Peter Howitt, 1994. "Growth and Unemployment," Review of Economic Studies, Oxford University Press, vol. 61(3), pages 477-494.
    7. Prinz, Aloys & Muehlbacher, Stephan & Kirchler, Erich, 2014. "The slippery slope framework on tax compliance: An attempt to formalization," Journal of Economic Psychology, Elsevier, vol. 40(C), pages 20-34.
    8. Dale T. Mortensen, 2005. "Alfred Marshall Lecture: Growth, Unemployment, and Labor Market Policy," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 236-258, 04/05.
    9. Tito Boeri & Pietro Garibaldi, "undated". "Shadow Activity and Unemployment in a Depressed Labor Market," Working Papers 177, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    10. Lisi, Gaetano, 2014. "The interaction between trust and power: Effects on tax compliance and macroeconomic implications," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 53(C), pages 24-33.
    11. Maxim Bouev, 2002. "Official Regulations and the Shadow Economy: A Labour Market Approach," William Davidson Institute Working Papers Series 524, William Davidson Institute at the University of Michigan.
    12. Gaetano Lisi, 2012. "Unemployment, tax evasion and the slippery slope framework," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 59(3), pages 297-302, September.
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    More about this item

    Keywords

    Behavioural macroeconomics; Economic growth and aggregate productivity; Unemployment; Underground economy;

    JEL classification:

    • E03 - Macroeconomics and Monetary Economics - - General - - - Behavioral Macroeconomics
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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