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

  • Hillel Rapoport

    ()

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

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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File URL: http://www.accessecon.com/pubs/EB/2002/Volume15/EB-02O10004A.pdf
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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. 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).
  2. 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.
  3. Ilahi, Nadeem, 1999. "Return Migration and Occupational Change," Review of Development Economics, Wiley Blackwell, vol. 3(2), pages 170-86, June.
  4. 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.
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