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An Alternative Approach to the Theory of Employment: Self-Employment versus Wage Employment


  • Dragan Filipovich

    (División de Economía, CIDE. México, D.F. Mexico.)


This paper presents a simple model illustrating an alternative approach to modelling employment in which instead of distinguishing between households and firms as is conventional, I work with market-oriented household-producers (in contrast to the subsistence-oriented entities in the household-production literature), and in which the sole reason for trade is specialization due to (external) increasing returns. The model establishes a link between self-employment and the scale of production, and in the process suggests a theory of the “emergence” of labor markets in which wage employment (as opposed to self-employment) emerges as a rather precarious arrangement that needs to be supported by various institutional devices.

Suggested Citation

  • Dragan Filipovich, 1997. "An Alternative Approach to the Theory of Employment: Self-Employment versus Wage Employment," Economía Mexicana NUEVA ÉPOCA, , vol. 0(2), pages 177-195, July-Dece.
  • Handle: RePEc:emc:ecomex:v:6:y:1997:i:2:p:177-195

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