CGE model

Formal-Informal Economy Linkages and Unemployment in South Africa

South Africa’s high involuntary unemployment and small informal sector are attributed to an underperforming formal sector and barriers to entry into the informal sector. Davies and Thurlow examine the economy-wide linkages between the formal and informal economies, while accounting for different types of informal activities. A multi-region, empirically calibrated computable general equilibrium (CGE) model is…