The unemployment volatility puzzle: the role of the underground economy

Gaetano Lisi

MPRA Paper from University Library of Munich, Germany

Abstract: Relying on the non-negligible role played by the underground economy in the labour market fluctuations, this paper extends the standard matching model à la Mortensen-Pissarides by introducing an underground sector along with an endogenous sector choice for both entrepreneurs and workers. These modifications improve the quantitative properties of the standard matching model, thus providing a possible explanation for the unemployment volatility puzzle.

Keywords: unemployment and vacancies volatility; productivity and job destruction shocks; underground economy; shadow economy; hidden economy; matching models. (search for similar items in EconPapers)
JEL-codes: E26 E32 J23 J24 J63 J64 L26 (search for similar items in EconPapers)
Date: 2010-05-13
New Economics Papers: this item is included in nep-dge, nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: THE UNEMPLOYMENT VOLATILITY PUZZLE: THE ROLE OF THE UNDERGROUND ECONOMY (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:22689

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