Underground Activities and Labour Market Performance

Arbeitspapier

This paper develops a general equilibrium search and matching model where an underground economy co-exists along with the formal part of the economy. In analyzing how tax and punishment policies a¤ect labour market performance, we nd that punishment of infor- mal sector activities induce workers and rms to reallocate towards the formal sector. However, more importantly, we nd that this real- location tends to improve e¢ ciency in search, reduce the overall wage pressure, and reduce actual unemployment.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working paper ; No. 5-2010

Classification and Topics

• Classification: Wirtschaft ; Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes ; Tax Evasion and Avoidance ; Unemployment: Models, Duration, Incidence, and Job Search
• Subject: Tax evasion ; Underground economy ; matching ; unemployment

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Larsen, Birthe ; Kolm, Ann-Sofie
• Event: Veröffentlichung
• (who): Copenhagen Business School (CBS), Department of Economics
• (where): Frederiksberg
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/208565
• Last update: 10.03.2025, 11:43 AM CET