This paper studies the effects of the introduction of unemployment compensation (UC) in countries characterized by pervasive informality. We provide a simple framework to analyze the impact of UC on the allocation of workers between formal and informal activities, as well as the allocation of...

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.

We estimate the intergenerational transmission of education in Turkey using micro-data from the 1990 and 2000 censuses. We construct a unique historical series of provincial enrollment rates by gender to isolate the environmental effect on parental education using an instrumental variable (IV)...