Occupational Choice, Wealth Distribution and Development

Emilio Colombo and Akos Valentinyi ()

No 25, Working Papers from University of Milano-Bicocca, Department of Economics

Abstract: This paper develops a model of occupational choice and income distribution in which both the wage rate and the interest rate are determined endogenously. We show the existence of multiple equilibria that depend on the initial distribution. In particular there can be a "development trap" characterized by many poor workers earning low wages and few rich entrepreneurs that exploit the low wage level and the high interest rate.

Pages: 28 pages
Date: 1999-09, Revised 1999-09
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http://repec.dems.unimib.it/repec/pdf/mibwpaper25.pdf First version, 1999 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:mib:wpaper:25

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