debate: the link between underground employment and unemployment. While the literature is unanimous in considering … underground employment and unemployment as strongly connected and interdependent phenomena, the link between existing causality is … controversial. Two key results emerge from this analysis. The first shows that the unemployment affects (with positive sign) the …

A matching model will explain both unemployment and economic growth by considering the underground sector. Three … between underground employment and unemployment, and (iii) between growth and unemployment. Key assumptions are that … contribute to growth. Underground employment alleviates unemployment only if the monitoring rate is sufficiently low. …