AN OCCUPATIONAL CHOICE MODEL FOR DEVELOPING COUNTRIES

Gerardo Jacobs ()
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Gerardo Jacobs: Departamento de Economia, Universidad Carlos III de Madrid

Journal of Economic Development, 2008, vol. 33, issue 2, 125-153

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.

Keywords: Occupational Choice; Human Capital; Economic Development; General Equilibrium (search for similar items in EconPapers)
JEL-codes: J24 O12 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:jed:journl:v:33:y:2008:i:2:p:125-153

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