THE UNEMPLOYMENT VOLATILITY PUZZLE: THE ROLE OF THE UNDERGROUND ECONOMY
THE UNEMPLOYMENT VOLATILITY PUZZLE: THE ROLE OF THE UNDERGROUND ECONOMY
Author(s): Gaetano LisiSubject(s): Economy
Published by: RITHA Publishing
Keywords: unemployment and vacancies volatility; productivity and job destruction shocks; underground economy; shadow economy; hidden economy; matching models
Summary/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.
Journal: Journal of Applied Economic Sciences (JAES)
- Issue Year: V/2010
- Issue No: 12
- Page Range: 59-69
- Page Count: 11
- Language: English
