Macroeconomic Policy in the Presence of an Irregular Sector

  • V. Ginsburgh
  • Ph. Michel
  • F. Padoa Schioppa
  • P. Pestieau
Part of the Studies in Contemporary Economics book series (CONTEMPORARY, volume 15)

Abstract

This paper is concerned with the policy implications of the combined presence of a regular observed and an irregular unobserved sector. It develops a two-sector model in which the regular sector is subject to fixed prices and wages, while the irregular sector wages may move freely. A number of regimes are shown to be possible and for each, we examine the effects of different policies on regular and overall employment. Ignorance of the existence of an irregular sector can lead to employment policies which ultimately reduce the overall level of employment.

Keywords

Income Expense Defend 

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Barro, R. and H. Grossman (1971), “A General Disequilibrium Model of Income and Employment”, American Economic Review 61, 82–93.Google Scholar
  2. Becker, G.S. (1971), The Economics of Discrimination, Chicago: University of Chicago Press.Google Scholar
  3. Benassy, J.P. (1975), “Neokeynesian Disequilibrium Theory in a Monetary Economy”, Review of Economic Studies 42, 503–523.CrossRefGoogle Scholar
  4. Fourgeaud, C., Lenclud, B. and P. Michel (1981), “Two-Sector-Model with Quantity Rationing”, Journal of Economic Theory 24, 413–436.CrossRefGoogle Scholar
  5. Frey, G. and W. Pommerehne (1982), “Measuring the Hidden Economy: Though this be Madness, yet there is Method in it?”, in Vito Tanzi, ed. The Underground Economy in the United States and Abroad.Google Scholar
  6. Malinvaud, E. (1977), The Theory of Unemployment Reconsidered, Oxford.: Basil Blackwell.Google Scholar
  7. Smith, A. (1981), “ A Review of the Informal Economy in the European Economy”, Economic Paper 3, Commission of the European Community.Google Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 1985

Authors and Affiliations

  • V. Ginsburgh
    • 1
  • Ph. Michel
    • 2
  • F. Padoa Schioppa
    • 3
  • P. Pestieau
    • 4
  1. 1.Université Libre de BruxellesBrusselsBelgium
  2. 2.SorbonneParisFrance
  3. 3.Libera Universita’ Internazionale Degli Studi SocialiRomeItaly
  4. 4.University of LiègeBelgium

Personalised recommendations