Financial Intermediation and Employment
AbstractIn our model, there are entrepreneurs and other agents. The latter have labour and capital, but no entrepreneurship. They are employed for a wage, or they are self-employed (which is inefficient). If they are employed for a wage, they invest their capital in financial assets. Otherwise, they take up self-employment, which requires capital and leaves little scope for buying financial assets. It can then be shown that investment in financial assets and wage employment are positively correlated. The model helps explain why a small financial system and low wage employment are observed in less developed countries that have high cost of financial intermediation.
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Bibliographic InfoPaper provided by Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi, India in its series Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi Discussion Papers with number 09-08.
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- Manoj Pant & Prabal Roy Chowdhury & Gurbachan Singh, 2004. "Financial intermediation and employment," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 04-22, Indian Statistical Institute, New Delhi, India.
- G20 - Financial Economics - - Financial Institutions and Services - - - General
- J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
- O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
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