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|
|Date of revision:|
|Publication status:||published in: Economic Letters, 2013, 118(1), 192-194|
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References listed on IDEAS
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- Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, June.
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ILADES-Georgetown University Working Papers
inv218, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines.
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- Zenou, Yves, 2008. "Job search and mobility in developing countries. Theory and policy implications," Journal of Development Economics, Elsevier, vol. 86(2), pages 336-355, June.
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- Acemoglu, Daron, 2001. "Good Jobs versus Bad Jobs," Journal of Labor Economics, University of Chicago Press, vol. 19(1), pages 1-21, January.
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