Showing papers by "Libera! published in 1985"
TL;DR: In this article, the authors consider the policy implications of the combined presence of a regular observed and an irregular unobserved sector and develop a two-sector model in which the regular sector is subject to fixed prices and wages, while the irregular sector wages may move freely.
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.
14 citations