Self-employment, wage employment, and informality in a developing economy

Self-Employment, Wage Employment and Informality in a Developing Economy

We construct a simple model incorporating various urban labour market phenomena obtaining in developing economies, and we give a diagrammatic formulation of the market equilibrium. Our initial formulation assumes an integrated labour market and allows for entrepreneurship, self-employment, and wage employment. We then introduce labour market segmentation. In equilibrium voluntary and involuntar...

Wealth Distribution and Self-Employment in a Developing Economy

The extent of entrepreneurial activity in an economy with poorly developed capital markets depends on the distribution of wealth, though in potentially complex ways. A nonparametric model of the wealth effect on self-employment is estimated using micro data on the occupational choices of return migrants in Tunisia. Controls for heterogeneity are included, and tests are made for selection bias a...

Risk attitudes and informal employment in a developing economy

Wage-Employment Contracts

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Wage Determination and Employment Fluctuations

Following a recession, the aggregate labor market is slack—employment remains below normal and recruiting efforts of employers, as measured by vacancies, are low. A model of matching frictions explains the qualitative responses of the labor market to adverse shocks, but requires implausibly large shocks to account for the magnitude of observed fluctuations. The incorporation of wage-setting fri...