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model, workers can supply labor simultaneously to the formal and the informal sectors, which we call moonlighting. The … medium income levels, while the possibility of moonlighting is relevant at higher earnings. …
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We build a general equilibrium model in which both illegal immigration and the size of the informal sector are endogenously determined. In this framework, we show that indirect policy measures such as tax reduction and detection of informal activities can be used as substitutes for border...
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