Scandinavian Working Papers in Economics

Working Paper Series,
Uppsala University, Department of Economics

No 2001:9: Moral, the Informal Sector, and Unemployment

Ann-Sofie Kolm () and Birthe Larsen ()
Additional contact information
Ann-Sofie Kolm: Department of Economics, Postal: Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden
Birthe Larsen: Centre for Research in Social Integration and Marginalization, Postal: Copenhagen Business School, Department of Economics , Solbjerg Plads 3, DK-2000 Copenhagen F, Denmark,

Abstract: 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, and heterogeneous workers in terms of moral. This facilitates an analysis of how wage setting and unemployment is affected by punishment policies, which is ignored in the previous literature.

Keywords: Tax evasion; wage bargains; matching; moral; unemployment

JEL-codes: H26

13 pages, February 16, 2001

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