Recruitment is often delegated to senior employees. Delegated recruitment, however, is vulnerable to moral hazard because senior employees may avoid recruiting the best candidates who could threaten their future seniority. We find that seniors will not deliberately choose bad candidates if the...

We study how the shadow economy affects pollution and how this effect depends on corruption levels in public administration. Production in the shadow economy allows firms to avoid environmental regulation policies; a large informal sector may be accompanied by higher pollution levels. Our...