 MODELING THE PARTICIPATION OF HOUSEHOLDS AND FIRMS IN FORMAL AND INFORMAL ECONOMIC ACTIVITIES*Journal for Economic Forecasting, 2004, vol. 1, issue 4, pages 5-20 Abstract: This paper presents a dynamic labor market model that describes the mechanisms through which individuals and firms take decisions regarding the supply of and the demand for formal and informal labor as a function of the prevailing market wage rates and other parameters. There are also presented the determinants and the characteristics of formal and informal labor supply schedules. The authors reach the conclusion that higher formal employment demands higher informal wages, ceteris paribus. Analyzing the formal and informal labor demand schedules, the conclusion is that higher formal employment levels result in higher reservation productivity, and vice versa, ceteris paribus. There are also analyzed the formal and informal employment equilibrium paths. (*The research was financed through a grant by the CERGE – EI foundation under a program of the Global Development Network. Additional funds for grantees have been provided by the Austrian Government through WIIW, Vienna). Keywords: informal economy; labor markets; companies’ and households’ behaviors; econometric modeling (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: http://EconPapers.repec.org/RePEc:rjr:romjef:v:1:y:2004:i:4:p:5-20 Access Statistics for this article Journal for Economic Forecasting is edited by Lucian Liviu Albu, Corina Saman and Cornelia Scutaru More articles in Journal for Economic Forecasting from Institute for Economic Forecasting |
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