Underground Activities and Labour Market Performance

Ann-Sofie Kolm, Birthe Larsen

Publikation: Working paperForskning

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Abstrakt

This paper develops a general equilibrium search and matching model where an underground economy co-exists along with the formal part of the economy. In analyzing how tax and punishment policies affect labour market performance, we find that punishment of informal sector activities induce workers and firms to reallocate towards the formal sector. However, more importantly, we find that this reallocation tends to improve effciency in search, reduce the overall wage
pressure, and reduce actual unemployment.
OriginalsprogEngelsk
Udgivelses stedFrederiksberg
UdgiverCopenhagen Business School, CBS
Antal sider18
StatusUdgivet - 2010
NavnWorking Paper / Department of Economics. Copenhagen Business School
Nummer5-2010

Emneord

  • Tax evasion
  • Underground economy
  • Matching
  • Unemployment

Citationsformater

Kolm, A-S., & Larsen, B. (2010). Underground Activities and Labour Market Performance. Copenhagen Business School, CBS. Working Paper / Department of Economics. Copenhagen Business School, Nr. 5-2010