Occupational Choice and the Process of Development
TL;DR: In this paper, the authors model economic development as a process of institutional transformation by focusing on the interplay between agents' occupational decisions and the distribution of wealth, and demonstrate the robustness of this result by extending the model dynamically and studying examples in which initial wealth distributions have long-run effects.
read more
Abstract: This paper models economic development as a process of institutional transformation by focusing on the interplay between agents' occupational decisions and the distribution of wealth. Because of capital market imperfections, poor agents choose working for a wage over self-employment, and wealthy agents become entrepreneurs who monitor workers. Only with sufficient inequality, however, will there be employment contracts; otherwise, there is either subsistence or self-employment. Thus, in static equilibrium, the occupational structure depends on distribution. Since the latter is itself endogenous, we demonstrate the robustness of this result by extending the model dynamically and studying examples in which initial wealth distributions have long-run effects. In one case the economy develops either widespread cottage industry (self-employment) or factory production (employment contracts), depending on the initial distribution; in the other example, it develops into prosperity or stagnation.
read more
Chat with Paper
AI Agents for this Paper
Find similar papers on Google Scholar, PubMed and Arxiv
Write a critical review of this paper
Analyze citations of this paper to find unaddressed research gaps
Citations
•Posted Content
Social Network Capital, Economic Mobility and Poverty Traps
TL;DR: In this paper, the authors explore the role of social network capital in facilitating poor agents' escape from poverty traps and show that it can serve as either a complement to or a substitute for productive assets.
62
Rural Financial Development Impacts on Agricultural Technology Innovation: Evidence from China.
TL;DR: In this article, the authors examined the impact of rural financial development on agricultural technology innovation from the perspective of rural finance scale and rural finance efficiency, and showed that improving the level of agricultural technology innovations is conducive to rural economic development.
62
Urbanization, informal sector, and development
TL;DR: In this article, a dynamic model of urbanization and development is proposed to investigate the underlying causes for the differences in the qualitative nature of urbanisation across countries, where some nations have experienced urbanization that accompanied skill upgrading, industrialization, and the expansion of the urban formal (modern) sector, but others urbanized without such modernization and underwent the expansion in the urban informal (traditional) sector simultaneously.
61
Field Experiments and the Practice of Policy
TL;DR: Esther Duflo delivered her Prize Lecture on Sunday 8 December 2019, at the Aula Magna, Stockholm University as mentioned in this paper, which was held at the University of Stockholm.
61
Financial constraints and occupational choice in Thai villages
TL;DR: In this paper, a model of occupational choice with moral hazard under three alternative financial market environments: savings only, borrowing and lending with default and moral hazard constrained insurance was proposed, and it was shown that the saving only regime is rejected in favor of regimes allowing for borrowing and/or insurance, especially in higher-wealth data stratifications.
60
References
Increasing Returns and Long-Run Growth
TL;DR: In this paper, the authors present a fully specified model of long-run growth in which knowledge is assumed to be an input in production that has increasing marginal productivity, which is essentially a competitive equilibrium model with endogenous technological change.
On the mechanics of economic development
TL;DR: In this article, the authors consider the prospects for constructing a neoclassical theory of growth and international trade that is consistent with some of the main features of economic development, and compare three models and compared to evidence.
21.5K
The mechanics of economic development
Robert E. Lucas
- 01 Jan 1988
Abstract: This paper considers the prospects for constructing a neoclassical theory of growth and international trade that is consistent with some of the main features of economic development. Three models are considered and compared to evidence: a model emphasizing physical capital accumulation and technological change, a model emphasizing human capital accumulation through schooling, and a model emphasizing specialized human capital accumulation through learning-by-doing.
20.8K
Agency Costs, Net Worth, and Business Fluctuations.
Mark Gertler,Ben S. Bernanke +1 more
TL;DR: The authors developed a simple neoclassical model of the business cycle in which the condition of borrowers' balance sheets is a source of output dynamics, and the mechanism is that higher borrower net worth reduces the agency costs of financing real capital investments.
5.5K
Income Distribution and Macroeconomics
Oded Galor,Joseph Zeira +1 more
TL;DR: The authors analyzes the role of wealth distribution in macroeconomics through investment in human capital and shows that the initial distribution of wealth affects aggregate output and investment both in the short and in the long run, as there are multiple steady states.