Nobody's business but my own: Self-employment and small enterprise in economic development
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.
References listed on IDEAS
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- Francis Teal, 1995. "Real wages and the demand for labour in Ghana's manufacturing sector," CSAE Working Paper Series 1995-07, Centre for the Study of African Economies, University of Oxford.
- Douglas Gollin, 2002.
"Getting Income Shares Right,"
Journal of Political Economy,
University of Chicago Press, vol. 110(2), pages 458-474, April.
- Gollin, Douglas, 1995. "Do Taxes on Large Firms Impede Growth? Evidence from Ghana," Bulletins 7488, University of Minnesota, Economic Development Center.
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