The Black Economy and Education

Birthe Larsen, Ann-Sofie Kolm

Research output: Working paperResearch

Abstract

This paper develops an equilibrium search and matching model with
informal sector employment opportunities and educational choice. We
show that informal sector job opportunities distort educational attain-
ment inducing a too low stock of educated workers. As informal job
opportunities to a larger extent face low skilled workers, combating the
informal sector improves welfare as it increases the incentives for edu-
cation. However, too aggressive combating of the informal sector is not
optimal as that induces ine¢ ciently high unemployment rates.
Original languageEnglish
Place of PublicationFrederiksberg
PublisherDepartment of Economics, Copenhagen Business School
Number of pages28
Publication statusPublished - 2010

Keywords

  • Tax evasion
  • underground economy
  • education, matching
  • unemployment

Cite this

Larsen, B., & Kolm, A-S. (2010). The Black Economy and Education. Frederiksberg: Department of Economics, Copenhagen Business School.
Larsen, Birthe ; Kolm, Ann-Sofie. / The Black Economy and Education. Frederiksberg : Department of Economics, Copenhagen Business School, 2010.
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Larsen, B & Kolm, A-S 2010 'The Black Economy and Education' Department of Economics, Copenhagen Business School, Frederiksberg.

The Black Economy and Education. / Larsen, Birthe; Kolm, Ann-Sofie.

Frederiksberg : Department of Economics, Copenhagen Business School, 2010.

Research output: Working paperResearch

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Larsen B, Kolm A-S. The Black Economy and Education. Frederiksberg: Department of Economics, Copenhagen Business School. 2010.