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.

Colombo, E., Valentinyi, A. (1999). Occupational Choice, Wealth Distribution and Development [Working paper del dipartimento].

Occupational Choice, Wealth Distribution and Development

COLOMBO, EMILIO;
1999

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.
Working paper del dipartimento
Scientifica
Occupational Choice, Wealth Distribution, Development
Italian
Colombo, E., Valentinyi, A. (1999). Occupational Choice, Wealth Distribution and Development [Working paper del dipartimento].
Colombo, E; Valentinyi, A
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10281/22939
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