The Efficiency of the Informal Sector on the Search and Matching Framework

Borradores de Economia
Number: 
832
Published: 
Classification JEL: 
H21, J64, J65
Keywords: 
Human capital agglomeration, Social returns, Private returns, Externalities, Uncertainty, Fiscal policy
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This paper analyzes efficiency in an economy with an informal sector that consists of unregulated self-employment, and where there are no costs of being informal, (Albrecht et al. (2009)). First, assuming workers in the formal sector are ex-ante heterogen