Since the beginning of the 1990s, the question of institutions has been propelled to the top of the economic agenda. If the empirical literature has well documented the general relationship between institutions and development, attention is now being concentrated on the actual nature of the...

We study the effect of UI benefits in a typical developing country where the informal sector is sizeable and persistent. In a partial equilibrium environment we characterize the stationary equilibrium of an economy where policyholders may be employed in the formal sector, short-run unemployed...