Efficiency in a search and matching economy with a competitive informal sector

Olivier Charlot; Franck Malherbet; Mustafa Ulus

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. -- search and matching models ; informality ; efficiency

Year of publication:	2012
Authors:	Charlot, Olivier ; Malherbet, Franck ; Ulus, Mustafa
Publisher:	Bonn : IZA
Subject:	Arbeitsmarktsegmentation \| Labour market segmentation \| Matching \| Informelle Wirtschaft \| Informal economy \| Allokationseffizienz \| Allocative efficiency \| Theorie \| Theory

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