Efficiency in a search and matching economy with a competitive informal sector

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.

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Bibliographic details
Volume: 6935
Main Author: Charlot, Olivier
Malherbet, Franck
Ulus, Mustafa
Format: Paper
Language: English
Place of publication: Bonn Institute for the Study of Labor (IZA) 2012
published in: Discussion Paper Series, Forschungsinstitut zur Zukunft der Arbeit Vol. 6935
Data of publication: 2012
Subjects:
Online Access: Fulltext
Database: EconStor
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