We provide an analysis of enforcement policies applicable to informal labor market in a framework with heterogeneous firms, endogenous determination of informal wage and politically dictated strategies. We argue that firms which operate both in the formal and informal sectors do very little to...

We provide an analysis of enforcement policies applicable to formal sector in dual labor markets. Using a framework with heterogeneous firms, endogenous determination of informal wage and politically dictated enforcement strategies, we show that firms which operate both in the formal and...