Efficiency in a Search and Matching Economy with a Competitive Informal Sector
We consider a dual labor market with a frictional formal sector and a competitive informal sector. We show that the size of the informal sector is generally too large compared to the optimal allocation of the workers. It follows that our results give a rationale to informality-reducing policies.
|Date of creation:||Oct 2012|
|Publication status:||published in: Economic Letters, 2013, 118(1), 192-194|
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- James Albrecht & Lucas Navarro & Susan Vroman, 2009.
"Efficiency in a Search and Matching Model with Endogenous Participation,"
ILADES-Georgetown University Working Papers
inv218, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines.
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- Albrecht, James & Navarro, Lucas & Vroman, Susan, 2009. "Efficiency in a Search and Matching Model with Endogenous Participation," IZA Discussion Papers 4097, Institute for the Study of Labor (IZA).
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- Arthur J. Hosios, 1990. "On The Efficiency of Matching and Related Models of Search and Unemployment," Review of Economic Studies, Oxford University Press, vol. 57(2), pages 279-298.
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