() and Birthe Larsen
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.
13 pages, February 16, 2001
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