The Dynamics of the Informal Economy
This paper analyses the factors that give rise to the existence of the informal economy and how it evolves over time.� Using an occupational-choice model the paper shows that at early stages of development, informal and formal markets coexist, but in the long-run the size of the informal economy can decline depending on the initial distribution of wealth.� The model shows that the higher the initial wealth inequality the larger the size of the informal economy and the higher the wealth inequality will be in the long-run.� The paper calibrates the model using numerical simulations.
|Date of creation:||01 Feb 2010|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.economics.ox.ac.uk/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:oxf:wpaper:csae-wps/2010-07. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Caroline Wise)
If references are entirely missing, you can add them using this form.