Download This PaperEfficiency in a Search and Matching Economy with a Competitive Informal Sector
9 Pages Posted: 20 Oct 2012
Date Written: October 20, 2012
Abstract
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
JEL Classification: E24, E26, J60, L16, O1
Suggested Citation: Suggested Citation
Charlot, Olivier and Malherbet, Franck and Ulus, Mustafa, Efficiency in a Search and Matching Economy with a Competitive Informal Sector (October 20, 2012). IZA Discussion Paper No. 6935, Available at SSRN: https://ssrn.com/abstract=2164664 or http://dx.doi.org/10.2139/ssrn.2164664
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