Arbeitspapier

Social norm, the informal sector and unemployment

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 on the labour market and a social norm. Conducting informal work, or employing a worker infor- mally, is associated with expected punishment fees and payments of a moral cost, given that there is a social norm against tax evasion. This framework facilitates an analysis of how wage setting, unemployment and the size of the informal sector are affected by punishment policies, which has been ignored in the previous literature. Furthermore, the inclusion of an endogenously determined norm against tax evasion may explain differences in-between regions or countries in relative sizes of the formal and the informal sectors for similar tax- and punishment policies.

Sprache
Englisch

Erschienen in
Series: Working paper ; No. 4-2002

Klassifikation
Wirtschaft
Tax Evasion and Avoidance
Unemployment: Models, Duration, Incidence, and Job Search
Thema
Tax evasion
informal sector
matching
bargaining
unemployment

Ereignis
Geistige Schöpfung
(wer)
Kolm, Ann-Sofie
Larsen, Birthe
Ereignis
Veröffentlichung
(wer)
Copenhagen Business School (CBS), Department of Economics
(wo)
Frederiksberg
(wann)
2002

Handle
Letzte Aktualisierung
10.03.2025, 11:45 MEZ

Datenpartner

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Objekttyp

  • Arbeitspapier

Beteiligte

  • Kolm, Ann-Sofie
  • Larsen, Birthe
  • Copenhagen Business School (CBS), Department of Economics

Entstanden

  • 2002

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