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
Financial Frictions and the Persistence of History: A Quantitative Exploration
Francisco J. Buera,Yongseok Shin +1 more
TL;DR: In this paper, the authors quantitatively analyze the role of financial frictions and resource misallocation in explaining development dynamics, and show that the model economy with financial Frictions converges to the new steady state slowly after a reform triggers efficient reallocation of resources; the transition speed is half that of the conventional neoclassical model.
Occupational Choice and the Spirit of Capitalism
TL;DR: The authors proposed a theory of preference formation under financial market imperfections that can account for this pattern, and found that parents shape their children's preferences in response to economic incentives, while upper-class families in occupations requiring effort, skill, and experience develop patience and a work ethic, whereas upperclass families relying on rental income cultivate a refined taste for leisure.
Dualism and macroeconomic volatility
TL;DR: This paper developed a simple macroeconomic model that shows that combining capital market imperfections together with unequal access to investment opportunities across individuals can generate endogenous and permanent euctuations in aggregate GDP, investment, and interest rates.
Finance and inequality: Channels and evidence ☆
TL;DR: In this paper, the authors provide a framework to interpret the recent literature on financial development and inequality, and provide evidence that poor access does not only reflect economic constraints but also barriers erected by insiders.
495
Further Simulation Evidence on the Performance of the Poisson Pseudo-Maximum Likelihood Estimator
J. S. Silva,Silvana Tenreyro +1 more
- 01 Aug 2011
TL;DR: This study provides further simulation evidence on the performance of the Poisson pseudo-maximum likelihood estimator, examining its bias, variance, and mean squared error under various conditions, including different sample sizes and data distributions.
494
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.