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.

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Year of publication:	2013
Authors:	Charlot, Olivier ; Malherbet, Franck ; Ulus, Mustafa
Published in:	Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 118.2013, 1, p. 192-194
Publisher:	Elsevier
Subject:	Search and matching models \| Informality \| Efficiency

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Type of publication:	Article
Classification:	E24 - Employment; Unemployment; Wages ; E26 - Informal Economy; Underground Economy ; J60 - Mobility, Unemployment, and Vacancies. General ; L16 - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure; Industrial Price Indices ; O1 - Economic Development
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010603123