We develop a model where formal sector firms pay tax and informal ones do not, but informal firms risk incurring the penalty associated with non-compliance. Workers may enter self-employment or search for jobs as employees. Workers with higher managerial skills will run larger firms while...

This article constitutes the first study of the employer size wage effect for a Caribbean country, namely the Republic of Trinidad and Tobago. Using a rich micro-level data set the authors estimate the firm size wage premium in an empirical model of wage determination. Despite exploring a...

We develop a model where workers may enter self-employment or search for jobs as employees and where there is heterogeneity across workers’ managerial ability. Workers with higher skills will manage larger firms while workers with low managerial ability will run smaller firms and will be in...