Occupational Choice, Wealth Distribution and Development
AbstractThis paper develops a model of occupational choice and income distribution in which both the wage rate and the interest rate are determined endogenously. We show the existence of multiple equilibria that depend on the initial distribution. In particular there can be a "development trap" characterized by many poor workers earning low wages and few rich entrepreneurs that exploit the low wage level and the high interest rate.
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Bibliographic InfoPaper provided by University of Milano-Bicocca, Department of Economics in its series Working Papers with number 25.
Length: 28 pages
Date of creation: Sep 1999
Date of revision: Sep 1999
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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911, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Banerjee, Abhijit V & Newman, Andrew F, 1993. "Occupational Choice and the Process of Development," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 274-98, April.
- Murphy, Kevin M. & Shleifer, Andrei & Vishny, Robert W., 1989.
"Industrialization and the Big Push,"
3606235, Harvard University Department of Economics.
- Hopenhayn, Hugo A & Prescott, Edward C, 1992. "Stochastic Monotonicity and Stationary Distributions for Dynamic Economies," Econometrica, Econometric Society, vol. 60(6), pages 1387-406, November.
- Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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