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• W2097168482 abstract "This paper characterizes optimal policies in the presence of tax evasion and undocumented workers. In equilibrium, domestic workers may work exclusively in the formal sector or also in the informal sector. Surprisingly, in equilibrium, wages are always equalized between domestic and undocumented workers, even if they do not work in the same sectors of the economy. This is driven by the interaction of firm level decisions with optimal government policy. We also find that enforcement may not always be decreasing in its cost, and that governments will optimally enforce labour market segmentation if enforcement costs are not too high." @default.
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• W2097168482 date "2011-12-01" @default.
• W2097168482 modified "2023-10-01" @default.
• W2097168482 title "Optimal Policies with an Informal Sector" @default.
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• W2097168482 doi "https://doi.org/10.1016/j.jpubeco.2010.10.010" @default.
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