services are produced both in the market and within the households. We use the model to examine how unemployment and welfare … reduces unemployment whereas a tax cut on goods has no effect. A reform involving tax differentiation, with lower taxes on …

facilitates an analysis of how wage setting and unemployment is affected by punishment policies, which is ignored in the previous …

both sectors, and (iii) reduces the unemployment rate. The effect of a higher audit rate is less clear. We find that a … ambiguous impact on unemployment and real wages. …