This paper analyses the emergence of the informal economy in the environment characterised by non-competitive labour markets with wage bargaining. We develop a simple extension of the standard search model à la Pissarides (2000) with formal and informal sectors to show how a government’s...

This paper analyses the emergence of the informal economy in the environment characterised by non-competitive labour markets with wage bargaining. We develop a simple extension of the standard search model à la Pissarides (2000) with formal and informal sectors to show how a government's...

We study the implications of economic policies on household's decisions. We focus on Chile in 2019. Using a life-cycle search model and survey data, we found that an equivalent change in labor tax rates and non-contributory pensions (NCP) have opposite effects on labor markets, specifically on...