Munich Personal RePEc Archive

The unemployment volatility puzzle: the role of the underground economy

Lisi, Gaetano (2010): The unemployment volatility puzzle: the role of the underground economy.

[img]
Preview
PDF
MPRA_paper_22689.pdf

Download (215kB) | Preview

Abstract

Relying on the non-negligible role played by the underground economy in the labour market fluctuations, this paper extends the standard matching model à la Mortensen-Pissarides by introducing an underground sector along with an endogenous sector choice for both entrepreneurs and workers. These modifications improve the quantitative properties of the standard matching model, thus providing a possible explanation for the unemployment volatility puzzle.

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.