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Informal Unemployment and Education

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Abstract

This paper develops a four sector equilibrium search and matching model with informal sector employment opportunities and educational choice. We show that underground activities reduce educational at- tainments if informal employment opportunities mainly are available to low educated workers. More zealous enforcement policy will in this case improve educational incentives as it reduces the attractiveness of remaining a low educated worker. Characterizing the optimal enforce- ment policies, we nd that relatively more audits should be targeted towards the sector employing low educated workers, elsewise a too low stock of educated workers is materialized.

Suggested Citation

  • Larsen, Birthe, 2011. "Informal Unemployment and Education," Working Papers 02-2011, Copenhagen Business School, Department of Economics.
    • Handle: RePEc:hhs:cbsnow:2011_002
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    2. Gaetano Lisi, 2024. "Shadow economy, “mixed” firms, and labour market outcomes," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 31(3), pages 685-701, June.
    3. Colin C. Williams, 2023. "A Modern Guide to the Informal Economy," Books, Edward Elgar Publishing, number 18668.
    4. Jean-Louis Bago & Wamadini M. Souratié & Ernest Ouédraogo & Pam Zahonogo, 2022. "Human Capital and Women’s Informal Work: Theory and Evidence," Journal of Economic Development, The Economic Research Institute, Chung-Ang University, vol. 47(3), pages 1-28.
    5. Temitope Sade AKINTUNDE & Abiodun Samuel ISAYOMI, 2023. "The Effect Of Informal Economy On Human Capital Development," Business & Management Compass, University of Economics Varna, issue 3, pages 182-195.
    6. Resham Thapa-Parajuli & Sujan Bhattarai & Bibek Pokharel & Maya Timsina, 2025. "Parental Informal Occupation Does Not Significantly Deter Children’s School Performance: A Case Study of Peri-Urban Kathmandu, Nepal," Economies, MDPI, vol. 13(4), pages 1-16, March.
    7. Azunre, Gideon Abagna & Amponsah, Owusu & Takyi, Stephen Appiah & Mensah, Henry & Braimah, Imoro, 2022. "Urban informalities in sub-Saharan Africa (SSA): A solution for or barrier against sustainable city development," World Development, Elsevier, vol. 152(C).
    8. Chiara Canta & Helmuth Cremer & Firouz Gahvari, 2024. "Welfare‐improving tax evasion," Scandinavian Journal of Economics, Wiley Blackwell, vol. 126(1), pages 98-126, January.
    9. Ligita Gasparėnienė & Rita Remeikienė & Colin C. Williams, 2022. "Unemployment and the Informal Economy," SpringerBriefs in Economics, Springer, number 978-3-030-96687-4, March.
    10. Gökçer Özgür & Ceyhun Elgin & Adem Y. Elveren, 2021. "Is informality a barrier to sustainable development?," Sustainable Development, John Wiley & Sons, Ltd., vol. 29(1), pages 45-65, January.
    11. Ligita Gasparėnienė & Rita Remeikienė & Colin C. Williams, 2022. "Theorizing the Informal Economy," SpringerBriefs in Economics, in: Unemployment and the Informal Economy, chapter 0, pages 7-60, Springer.
    12. Das, Papri, 2025. "Unlocking potentials: The impact of human capital investment in youth informal employment in emerging markets and developing economies," International Journal of Educational Development, Elsevier, vol. 116(C).
    13. Ann-Sofie Kolm & Birthe Larsen, 2019. "Underground activities and labour market performance," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(1), pages 41-70, February.

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    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies

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