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 and separability between wealth and the controls. There is no sign of increasing returns at low wealth, suggesting generally low start-up costs in this setting. The aggregate self-employment rate is an increasing function of aggregate wealth, but a decreasing function of wealth inequality, though even substantial redistributions of wealth would have only a small impact.
Authors
Alice Mesnard
Martin Ravallion
Report details
- Publisher
- CEPR
Suggested citation
Mesnard, A and Ravallion, M. (2004). Wealth distribution and self-employment in a developing country. London: CEPR. Available at: https://ifs.org.uk/publications/wealth-distribution-and-self-employment-developing-country (accessed: 20 May 2024).
Related documents
More from IFS
Understand this issue
Sure Start achieved its aims, then we threw it away
15 April 2024
Retirement is not always a choice that workers can afford to make
6 November 2023
When and why should we care about inequality?
9 August 2023
Policy analysis
Distributional analysis of Ghana’s tax system
18 December 2023
Living standards since the last election
21 March 2024
Housing costs and income inequality in the UK
17 November 2023
Academic research
Police infrastructure, police performance, and crime: Evidence from austerity cuts
24 April 2024
Saving by buying ahead: stockpiling in response to lump-sum payments
2 February 2024
Self-employment and labor market risks
9 January 2024