THE UNEMPLOYMENT VOLATILITY PUZZLE: THE ROLE OF THE UNDERGROUND ECONOMY

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.

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Year of publication:	2010
Authors:	GAETANO, Lisi
Published in:	Journal of Applied Economic Sciences. - Facultatea de Management Financiar Contabil. - Vol. 5.2010, 2(12)/Summer2010, p. 59-69
Publisher:	Facultatea de Management Financiar Contabil
Subject:	unemployment and vacancies volatility \| productivity and job destruction shocks \| underground economy \| shadow economy \| hidden economy \| matching models

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Extent:	application/pdf
Type of publication:	Article
Language:	English
Classification:	E26 - Informal Economy; Underground Economy ; E32 - Business Fluctuations; Cycles ; J23 - Employment Determination; Job Creation; Demand for Labor; Self-Employment ; J24 - Human Capital; Skills; Occupational Choice; Labor Productivity ; J63 - Turnover; Vacancies; Layoffs ; J64 - Unemployment: Models, Duration, Incidence, and Job Search
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10008644983