We examine whether an economy can have a bad (small or no formal sector, hightaxes) as well as a good (small or no informal sector, low taxes) equilibrium...

We develop a simple labour turnover model of general training. Upon completion of theirtraining, apprentices are equipped with general skills and they accumulate firm-specificskills by continuing working for their training firm. Job turnover is associated with a loss ofaccumulated firm-specific...