Bargain, Olivier; El Badaoui, Eliane; Kwenda, Prudence; … - Institute for the Study of Labor (IZA) - 2012
We develop a model where formal sector firms pay tax and informal ones do not, but informal firms risk incurring the penalty associated with non-compliance. Workers may enter self-employment or search for jobs as employees. Workers with higher managerial skills will run larger firms while...