Occupational Choice, Financial Market Imperfections and Development

Emilio Colombo and Akos Valentinyi ()

No 49, Working Papers from University of Milano-Bicocca, Department of Economics

Abstract: We develop a simple model of occupational choice under financial market im- perfections, in the presence of technological convexities. The aim is to analyze the quantitative effect of these imperfections on the level of income. We find that although their effect is relatively large, financial market imperfections alone are not able to explain the observed cross country difference in income. However, when interacted with the issue of mobility, those imperfections become much more relevant, to the point of pushing the economy into a development trap.

Pages: 29 pages
Date: 2002-01, Revised 2002-01
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Persistent link: https://EconPapers.repec.org/RePEc:mib:wpaper:49

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