Séminaires Matuszewski

Labor Market Search and Informality with Endogenous Schooling Investments

Many labor markets, typically in medium- and low-income countries, are characterized by high levels of informality. While informality may constitute an important margin to increase labor market flexibility, it may also dampen firms' and workers' productivity. This paper explores one long-term effect of informality: the possible under-investment in individuals' education \textit{prior} to labor market entry. To do so, we formalize the presence of informal job  opportunities in a search-matching-bargaining model of the labor market with endogenous schooling decisions.