Underground Activities and Labour Market Performance

Ann-Sofie Kolm, Birthe Larsen

Research output: Working paperResearch

Abstract

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.
Original languageEnglish
Place of PublicationFrederiksberg
PublisherCopenhagen Business School, CBS
Number of pages18
Publication statusPublished - 2010
SeriesWorking Paper / Department of Economics. Copenhagen Business School
Number5-2010

Keywords

  • Tax evasion
  • Underground economy
  • Matching
  • Unemployment

Cite this

Kolm, A-S., & Larsen, B. (2010). Underground Activities and Labour Market Performance. Frederiksberg: Copenhagen Business School, CBS. Working Paper / Department of Economics. Copenhagen Business School, No. 5-2010
Kolm, Ann-Sofie ; Larsen, Birthe. / Underground Activities and Labour Market Performance. Frederiksberg : Copenhagen Business School, CBS, 2010. (Working Paper / Department of Economics. Copenhagen Business School; No. 5-2010).
@techreport{5b59302558b94708bab3224d352b9185,
title = "Underground Activities and Labour Market Performance",
abstract = "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 wagepressure, and reduce actual unemployment.",
keywords = "Tax evasion, Underground economy, Matching, Unemployment, Tax evasion, Underground economy, Matching, Unemployment",
author = "Ann-Sofie Kolm and Birthe Larsen",
year = "2010",
language = "English",
publisher = "Copenhagen Business School, CBS",
address = "Denmark",
type = "WorkingPaper",
institution = "Copenhagen Business School, CBS",

}

Kolm, A-S & Larsen, B 2010 'Underground Activities and Labour Market Performance' Copenhagen Business School, CBS, Frederiksberg.

Underground Activities and Labour Market Performance. / Kolm, Ann-Sofie; Larsen, Birthe.

Frederiksberg : Copenhagen Business School, CBS, 2010.

Research output: Working paperResearch

TY - UNPB

T1 - Underground Activities and Labour Market Performance

AU - Kolm, Ann-Sofie

AU - Larsen, Birthe

PY - 2010

Y1 - 2010

N2 - 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 wagepressure, and reduce actual unemployment.

AB - 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 wagepressure, and reduce actual unemployment.

KW - Tax evasion

KW - Underground economy

KW - Matching

KW - Unemployment

KW - Tax evasion

KW - Underground economy

KW - Matching

KW - Unemployment

M3 - Working paper

BT - Underground Activities and Labour Market Performance

PB - Copenhagen Business School, CBS

CY - Frederiksberg

ER -

Kolm A-S, Larsen B. Underground Activities and Labour Market Performance. Frederiksberg: Copenhagen Business School, CBS. 2010.