An Alternative Approach to the Theory of Employment: Self-Employment versus Wage Employment
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.
Volume (Year): VI (1997)
Issue (Month): 2 (July-December)
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