IDEAS home Printed from
   My bibliography  Save this article

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.

Suggested Citation

  • Hillel Rapoport, 2002. "Migration, credit constraints and self-employment: A simple model of occupational choice, inequality and growth," Economics Bulletin, AccessEcon, vol. 15(7), pages 1-5.
  • Handle: RePEc:ebl:ecbull:eb-02o10004

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Ilahi, Nadeem, 1999. "Return Migration and Occupational Change," Review of Development Economics, Wiley Blackwell, vol. 3(2), pages 170-186, June.
    2. Dustmann, Christian & Kirchkamp, Oliver, 2002. "The optimal migration duration and activity choice after re-migration," Journal of Development Economics, Elsevier, vol. 67(2), pages 351-372, April.
    3. 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 164-178, May.
    4. 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 274-298, April.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Naudé, Wim & Siegel, Melissa & Marchand, Katrin, 2015. "Migration, Entrepreneurship and Development: A Critical Review," IZA Discussion Papers 9284, Institute for the Study of Labor (IZA).
    2. 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.
    3. Ayal Kimhi, 2010. "Entrepreneurship and income inequality in southern Ethiopia," Small Business Economics, Springer, vol. 34(1), pages 81-91, January.
    4. 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.
    5. Vincenzo Lombardo, 2012. "Modern foundations of dual economy models," Discussion Papers 8_2012, CRISEI, University of Naples "Parthenope", Italy.
    6. Djajić, Slobodan & Vinogradova, Alexandra, 2015. "Overshooting the Savings Target: Temporary Migration, Investment in Housing and Development," World Development, Elsevier, vol. 65(C), pages 110-121.
    7. 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.
    8. Michael A. Clemens & Claudio Montenegro & Lant Pritchett, 2016. "Bounding the Price Equivalent of Migration Barriers," CID Working Papers 316, Center for International Development at Harvard University.
    9. Sonia Laszlo & Eric Santor, 2004. "Internal Migration and Borrowing Constraints: Evidence from Peru," Development and Comp Systems 0411022, EconWPA.
    10. 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.
    11. Naude, Wim, 2008. "Entrepreneurship in Economic Development," WIDER Working Paper Series 020, World Institute for Development Economic Research (UNU-WIDER).
    12. Roxana Gutiérrez & Luciana Méndez, 2017. "Does inequality foster or hinder the growth of entrepreneurship in the long-run?," Documentos de Trabajo (working papers) 17-10, Instituto de Economía - IECON.
    13. I-Ling Shen & Frédéric Docquier & Hillel Rapoport, 2010. "Remittances and inequality: a dynamic migration model," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 8(2), pages 197-220, June.
    14. 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.
    15. Rapoport, Hillel & Docquier, Frederic, 2006. "The Economics of Migrants' Remittances," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier.
    16. Hanson, Gordon H., 2010. "International Migration and the Developing World," Handbook of Development Economics, Elsevier.
    17. 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.
    18. 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.

    More about this item

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • F2 - International Economics - - International Factor Movements and International Business


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ebl:ecbull:eb-02o10004. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (John P. Conley). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.