The Search and Matching Equilibrium in an Economy with an Informal Sector

A Positive Analysis of Labour Market Policies

Dados Bibliográficos

ID6166571
AutoresLuz Adriana Flórez (0000-0001-9813-6720, autor correspondente)
Ano2015
Fascículo75
Páginas51-99
Data de publicação2015-01-01
Peer ReviewedSim
Open AccessSim
TipoARTICLE
PeriódicoRevista Desarrollo y Sociedad (JOURNAL)
Identificadores do periódicoISSN: 0120-3584 • E-ISSN: 1900-7760
EditoraUniversidad de los Andes (PUBLISHER • VE)
DOI10.13043/dys.75.2
OpenAlexW1516608087
IdiomaEN
Citações recebidas1
Referências citadas29

This paper contributes to the theoretical analysis of the informal sector through the search and matching framework. Building upon the work of Albrecht, Navarro and Vroman (2009), where the informal sector consists of unregulated self-employment, I describe the search and matching equilibrium in an economy with an informal sector where workers are risk neutral and the government is able to see whether a worker is in the formal sector or in the informal one. In this case, I solve the matching equilibrium by introducing three policies: unemployment benefits, a formal lump sum tax, and a job creation subsidy. I analyze the effects of these policies on unemployment rates, formal employment and informal employment. I show that these policies affect the incentives of workers insofar as joining the formal or informal sectors, changing the composition of these two types of workers in the labor market

Economic growth · Economics · Government (linguistics · Incentive · Informal sector · Labour economics · Laissez-faire · Market economy · Matching (statistics · Microeconomics · Subsidy · Unemployment · Work (physics · Digital Economy and Work Transformation · Fiscal Policy and Economic Growth · Taxation and Compliance Studies