MORAL COSTS, THE INFORMAL SECTOR AND UNEMPLOYMENT

Ann-Sofie Kolm and Birthe Larsen

No 01-2001, Working Papers from Copenhagen Business School, Department of Economics

Abstract: While examining the macroeconomic effects of increased government control of the informal sector, this paper develops a two-sector general equilibrium model featuring matching frictions and worker-firm wage bargaining. The same good is produced in the formal and in the informal sector. Moral considerations are determinant for whether the worker search for jobs in the formal or in the informal sector. We analyse the impact of higher punishment fees and a higher audit rate on wages, sector division, unemployment and welfare.

Keywords: Employment; Unemployment; Wages; Macroeconomics (search for similar items in EconPapers)
JEL-codes: E20 E24 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2001-01-22
References: Add references at CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://openarchive.cbs.dk/cbsweb/handle/10398/7525 (application/pdf)
Full text not avaiable

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:cbsnow:2001_001

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Working Papers from Copenhagen Business School, Department of Economics Copenhagen Business School, Department of Economics, Porcelaenshaven 16 A. 1.floor, DK-2000 Frederiksberg, Denmark. Contact information at EDIRC.
Bibliographic data for series maintained by CBS Library Research Registration Team ().