Optimal Policies with an Informal Sector

• 成果类型: Article
• 署名作者: Cuff, Katherine; Marceau, Nicolas; Mongrain, Steeve; Roberts, Joanne
• 署名单位: University of Calgary; McMaster University; University of Quebec; University of Quebec Montreal; Simon Fraser University
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2010.10.010
• 发表日期: 2011
• 页码: 1280-1291
• 关键词: Informal Labour Market; ENFORCEMENT; Undocumented Workers; Public Good Provision

摘要

This paper characterizes optimal policies in the presence of tax evasion and undocumented workers. In equilibrium, domestic workers may work exclusively in the formal sector or also in the informal sector. Surprisingly, in equilibrium, wages are always equalized between domestic and undocumented workers, even if they do not work in the same sectors of the economy. This is driven by the interaction of firm level decisions with optimal government policy. We also find that enforcement may not always be decreasing in its cost, and that governments will optimally enforce labour market segmentation if enforcement costs are not too high. (C) 2010 Elsevier B.V. All rights reserved.