Efficiency in a Search and Matching Economy with a Competitive Informal Sector
Franck Malherbet () and
Mustafa Ulus ()
No 6935, IZA Discussion Papers from Institute of Labor Economics (IZA)
We consider a dual labor market with a frictional formal sector and a competitive informal sector. We show that the size of the informal sector is generally too large compared to the optimal allocation of the workers. It follows that our results give a rationale to informality-reducing policies.
Keywords: search and matching models; informality; efficiency (search for similar items in EconPapers)
JEL-codes: E24 E26 J60 L16 O1 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-iue and nep-mac
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Published in: Economic Letters, 2013, 118(1), 192-194
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Journal Article: Efficiency in a search and matching economy with a competitive informal sector (2013)
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