The Black Economy and Education

Ann-Sofie Kolml () and Birthe Larsen
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Ann-Sofie Kolml: Dept. of Economics, Stockholm University, Postal: Department of Economics, Stockholm University, S-106 91 Stockholm, Sweden, http://people.su.se/~akolm/
Authors registered in the RePEc Author Service: Ann-Sofie Kolm

No 2010:3, Research Papers in Economics from Stockholm University, Department of Economics

Abstract: This paper develops and equilibrium search and matching model with informal sector employment opportunities and educational choice. We show that informal sector job opportunities distort educational attainment 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 education. However, too aggressive combating of the informal sector is not optimal as that induces inefficiently high unemployment rates.

Keywords: Tax evasion; underground economy; education; matching; unemployment (search for similar items in EconPapers)
JEL-codes: H26 I21 J64 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2010-02-02
New Economics Papers: this item is included in nep-dge, nep-edu, nep-hrm and nep-lab
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:hhs:sunrpe:2010_0003

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