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An Occupational Choice Model For Developing Countries

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  • Gerardo Jacobs

    () (Departamento de Economia, Universidad Carlos III de Madrid)

Abstract

Most occupational choice models introduce only two options for agents: entrepreneurial activities or wage-employment. However, these models represent inadequately the labor force distribution from developing countries, where an important proportion of the total work force are self-employed workers. Some models introduce self-employment as an occupational choice. These works have a common feature: when in equilibrium, wage earners belong to the lower end of the income distribution. Nevertheless, for a large set of developing countries, peasants and small proprietors are part of a self-employment sector that can mostly be found in the lower end of the income distribution. In contrast with previous efforts, in this work self-employment formation is consistent with data from most developing countries. We pay special attention to the conditions under which either the economy ends in a low income equilibrium where self-employment is the only form of production, or alternatively, the economy ends in a high income equilibrium with a well developed labor market. We study some public policy issues, paying special attention to role of capital markets and the efficiency of schooling.

Suggested Citation

  • Gerardo Jacobs, 2008. "An Occupational Choice Model For Developing Countries," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 33(2), pages 125-153, December.
  • Handle: RePEc:jed:journl:v:33:y:2008:i:2:p:125-153
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    File URL: http://www.jed.or.kr/full-text/33-2/6.pdf
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    References listed on IDEAS

    as
    1. Justin van der Sluis & Mirjam van Praag & Wim Vijverberg, 2003. "Entrepreneurship Selection and Performance," Tinbergen Institute Discussion Papers 03-046/3, Tinbergen Institute, revised 24 Sep 2004.
    2. 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.
    3. van Praag, C M & Cramer, J S, 2001. "The Roots of Entrepreneurship and Labour Demand: Individual Ability and Low Risk Aversion," Economica, London School of Economics and Political Science, vol. 68(269), pages 45-62, February.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Arndt Werner & Johanna Gast & Sascha Kraus, 2014. "The effect of working time preferences and fair wage perceptions on entrepreneurial intentions among employees," Small Business Economics, Springer, vol. 43(1), pages 137-160, June.

    More about this item

    Keywords

    Occupational Choice; Human Capital; Economic Development; General Equilibrium;

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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