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Migration, credit constraints and self-employment: A simple model of occupational choice, inequality and growth

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  • Hillel Rapoport

    ()
    (CREDPR, Department of Economics, Stanford University, and Bar-Ilan University)

Abstract

In this note we offer a simplification of Mesnard (2001) who extended Banerjee and Newman (1993) for migration. In doing so, we obtain a simple model of occupational choice, inequality and growth, where liquidity constraints determine not only access to entrepreneurship but also access to migration. Starting from an initial underdevelopment trap, we explore the conditions under which migration prospects allow for a shift towards the efficient long-run equilibrium of the economy. This complements the empirical literature on return migration and self-employment in highlighting the mechanisms whereby, in alleviating liquidity constraints for some households, migration and remittances may have significant aggregated effects.

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Bibliographic Info

Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 15 (2002)
Issue (Month): 7 ()
Pages: 1-5

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Handle: RePEc:ebl:ecbull:eb-02o10004

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  1. Abhijit V. Banerjee & Andrew F. Newman, 1990. "Occupational Choice and the Process of Development," Discussion Papers 911, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  2. McCormick, Barry & Wahba, Jackline, 2001. "Overseas Work Experience, Savings and Entrepreneurship amongst Return Migrants to LDCs," Scottish Journal of Political Economy, Scottish Economic Society, vol. 48(2), pages 164-78, May.
  3. Dustmann, Christian & Kirchkamp, Oliver, 2001. "The Optimal Migration Duration and Activity Choice after Re-migration," IZA Discussion Papers 266, Institute for the Study of Labor (IZA).
  4. Ilahi, Nadeem, 1999. "Return Migration and Occupational Change," Review of Development Economics, Wiley Blackwell, vol. 3(2), pages 170-86, June.
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Cited by:
  1. I-Ling Shen & Frédéric Docquier & Hillel Rapoport, 2010. "Remittances and inequality: a dynamic migration model," Journal of Economic Inequality, Springer, vol. 8(2), pages 197-220, June.
  2. Mendola, Mariapia, 2008. "Migration and technological change in rural households: Complements or substitutes?," Journal of Development Economics, Elsevier, vol. 85(1-2), pages 150-175, February.
  3. Vincenzo Lombardo, 2012. "Modern foundations of dual economy models," Discussion Papers 8_2012, CRISEI, University of Naples "Parthenope", Italy.
  4. Sahana Roy Chowdhury, 2008. "Migration in a model of occupational choice," Indian Growth and Development Review, Emerald Group Publishing, vol. 1(1), pages 84-94, April.
  5. Kimhi, Ayal, 2009. "Entrepreneurship and Income Inequality in Southern Ethiopia," Discussion Papers 47505, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.
  6. Mariapia Mendola, 2004. "Migration and Technological Change in Rural Households: Complements or Substitutes?," Development Working Papers 195, Centro Studi Luca d\'Agliano, University of Milano.
  7. Hanson, Gordon H., 2010. "International Migration and the Developing World," Handbook of Development Economics, Elsevier.
  8. Jialu Liu, 2010. "Does Migration Income Help Hometown Business? Evidences from Rural Households Survey in China," Economics Bulletin, AccessEcon, vol. 30(4), pages 2598-2611.
  9. Rapoport, Hillel & Docquier, Frédéric, 2005. "The Economics of Migrants’ Remittances," IZA Discussion Papers 1531, Institute for the Study of Labor (IZA).
  10. Jialu Liu, 2011. "Human capital, migration and rural entrepreneurship in China," Indian Growth and Development Review, Emerald Group Publishing, vol. 4(2), pages 100-122, September.
  11. Gordon H. Hanson, 2006. "Illegal Migration from Mexico to the United States," Journal of Economic Literature, American Economic Association, vol. 44(4), pages 869-924, December.
  12. Bertoli Simone, 2006. "Remittances and the Dynamics of Human Capitalin the Recipient Country," Department of Economics and Statistics Cognetti de Martiis. Working Papers 200607, University of Turin.
  13. Sonia Laszlo & Eric Santor, 2004. "Internal Migration and Borrowing Constraints: Evidence from Peru," Development and Comp Systems 0411022, EconWPA.
  14. Naude, Wim, 2008. "Entrepreneurship in Economic Development," Working Paper Series RP2008/20, World Institute for Development Economic Research (UNU-WIDER).

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