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An evolutionary game theory approach to the dynamics of the labour market: A formal and informal perspective

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  • Araujo, Ricardo Azevedo
  • de Souza, Nathalia Almeida

Abstract

A stylized fact of the labour market in developing countries is that it is highly segmented in informality. One of the main factors that induce workers and firms into informality is an excessive regulatory system that makes formal economy little attractive. This study aims to analyze the dynamics of workers and firms' entrance and withdrawal of the formal and informal economy, assessing the impact of taxes by using an evolutionary game theory approach in which economic agents decide for one these markets according to the expected pay-off. Moreover, the optimal relation between regulatory and enforcement action by the government is evaluated.

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  • Araujo, Ricardo Azevedo & de Souza, Nathalia Almeida, 2010. "An evolutionary game theory approach to the dynamics of the labour market: A formal and informal perspective," Structural Change and Economic Dynamics, Elsevier, vol. 21(2), pages 101-110, May.
    • Handle: RePEc:eee:streco:v:21:y:2010:i:2:p:101-110
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    8. Ceyhun Elgin & Hasan kadir Tosun, 2017. "A note on informality and public trust," Economics Bulletin, AccessEcon, vol. 37(4), pages 2595-2601.
    9. Kevin Hu & Feng Fu, 2021. "Evolutionary Dynamics of Gig Economy Labor Strategies under Technology, Policy and Market Influence," Games, MDPI, vol. 12(2), pages 1-31, June.
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