We build a general equilibrium model in which both illegal immigration and the size of the informal sector are endogenously determined. In this framework, we show that indirect policy measures such as tax reduction and detection of informal activities can be used as substitutes for border...

Various studies found wage gaps between formal and informal sector workers even after controlling for a number of individual and firm level characteristics. It has also been shown that earnings differentials across these sectors are quite stable over the years. While there is limited amount of...

The aim of this paper is to evaluate two contrasting ways of explaining and tackling undeclared work. The rational economic actor approach theorizes undeclared work as arising when the benefits of undertaking undeclared work outweigh the costs, and the policy focus is upon deterring undeclared...

This paper provides an evidence-based evaluation of the competing ways of explaining and tackling the informal economy. Conventionally, participants have been viewed as rational economic actors who engage in the informal economy when the benefits outweigh the costs, and thus participation is...

While there is general agreement that regulatory avoidance is an important part of firms' decisions to produce in the informal sector, there is much less agreement on how regulation and enforcement affect firms' decisions on, inter alia, which sector they locate in, their employment decisions,...

In this article we explore factors related to the probability of being an informal worker in Colombia; in particular, we are interested in analyzing whether the time spent searching for a job affects in a significant manner the probability of being an informal worker. We also explore...

In India, more than ninety percent of the workforce is informal. In spite of this enormous percentage of informal workers, these workers remain invisible from law and policy circles. One of the reasons for such exclusion and invisibility is the absence of unionism involving informal workers. In...

This paper exploits a unique dataset on corruption and informal sector employment in 476 Brazilian municipalities to estimate whether corruption impacts GDP or income levels once variation in informal economic activity is taken into account. Overall, I find that higher levels of corruption and a...

The paper highlights the interaction between the underground economy and corruption, focusing on the regional dimensions of the problem in south-eastern Europe. It discusses the theoretical approach to underground economic activities and focuses on the determinants of the Greek economy, the tax...

We study how trade liberalization affects formal employment across gender. We propose a theoretical mechanism to explain how male and female formal employment shares can respond differently to trade liberalization through labor reallocation across tradable and non-tradable sectors. Using Mexican...