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Nobody's business but my own: Self-employment and small enterprise in economic development

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  • Gollin, Douglas

Abstract

In most poor countries, small firms and self-employment are the dominant forms of business enterprise--even in the manufacturing sector. For rich countries, in contrast, self-employed people account for very small shares of manufacturing employment and output. This paper builds on Lucas [1978. On the size distribution of business firms. Bell Journal of Economics 9(2), 508-523] to ask whether structural changes of this kind are driven by productivity differences. A model, calibrated to Japanese time-series data, is shown to mimic key features of cross-country and time-series data. The results support the idea that changes in aggregate productivity account for much of the cross-country variation in establishment size and self-employment rates.

Suggested Citation

  • Gollin, Douglas, 2008. "Nobody's business but my own: Self-employment and small enterprise in economic development," Journal of Monetary Economics, Elsevier, vol. 55(2), pages 219-233, March.
  • Handle: RePEc:eee:moneco:v:55:y:2008:i:2:p:219-233
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    More about this item

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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