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

Dragan Filipovich
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Dragan Filipovich: División de Economía, CIDE. México, D.F. Mexico.

Economía Mexicana NUEVA ÉPOCA, 1997, vol. VI, issue 2, 177-195

Abstract: 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.

Date: 1997
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Persistent link: https://EconPapers.repec.org/RePEc:emc:ecomex:v:6:y:1997:i:2:p:177-195

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