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Wealth Distribution and Self-Employment in a Developing Economy

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  • Mesnard, Alice
  • Ravallion, Martin

Abstract

The extent of entrepreneurial activity in an economy with poorly developed capital markets depends on the distribution of wealth, though in potentially complex ways. A non-parametric model of the wealth effect on self-employment is estimated using micro data on the occupational choices of return migrants in Tunisia. Controls for heterogeneity are included, and tests are made for selection bias and separability between wealth and the controls. There is no sign of increasing returns at low wealth, suggesting generally low start-up costs in this setting. The aggregate self-employment rate is an increasing function of aggregate wealth, but a decreasing function of wealth inequality, though even substantial redistributions of wealth would have only a small impact.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3026.

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Date of creation: Oct 2001
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Handle: RePEc:cpr:ceprdp:3026

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Related research

Keywords: borrowing constraints; migration; self-employment; wealth inequality;

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References

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  1. Magnac, Thierry & Robin, Jean-Marc, 1996. "Occupational choice and liquidity constraints," Ricerche Economiche, Elsevier, vol. 50(2), pages 105-133, June.
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Citations

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Cited by:
  1. Frederic, DOCQUIER & Hillel, RAPOPORT & I-Leng Shen, 2007. "Remittances and inequality : A dynamic migration model," Discussion Papers (ECON - Département des Sciences Economiques) 2007003, Université catholique de Louvain, Département des Sciences Economiques.
  2. Frederic Docquier & Hillel Rapoport, 2007. "Skilled migration: the perspective of developing countries," CReAM Discussion Paper Series 0710, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  3. Docquier, Frederic & Marfouk, Abdeslam, 2004. "Measuring the international mobility of skilled workers (1990-2000) : release 1.0," Policy Research Working Paper Series 3381, The World Bank.
  4. João Pedro W. de Azevedo, 2004. "Entrepreneurship And Liquidity Constraints In Deprived Areas: Evidence From The Slums Of Rio De Janeiro," Anais do XXXII Encontro Nacional de Economia [Proceedings of the 32th Brazilian Economics Meeting] 135, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].

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