Informal Unemployment and Education

Anne-Sofie Kolm, Birthe Larsen

Research output: Working paperResearch

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Abstract

This paper develops a four sector equilibrium search and matching model with informal sector employment opportunities and educational choice. We show that underground activities reduce educational attainments if informal employment opportunities mainly are available to low educated workers. More zealous enforcement policy will in this case improve educational incentives as it reduces the attractiveness of remaining a low educated worker. Characterizing the optimal enforcement policies, we nd that relatively more audits should be targeted towards the sector employing low educated workers, elsewise a too low stock of educated workers is materialized.
Original languageEnglish
Place of PublicationFrederiksberg
PublisherCopenhagen Business School, CBS
Number of pages48
Publication statusPublished - 5 Aug 2011
SeriesWorking Paper / Department of Economics. Copenhagen Business School
Number2-2011

Keywords

  • Tax Evasion
  • The Informal Sector
  • Education
  • Matching
  • Unemplyment

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