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Annals of Finance

, 5:495 | Cite as

Self-employment rates and business size: the roles of occupational choice and credit market frictions

  • Ahmet Akyol
  • Kartik Athreya
Symposium

Abstract

Self-employment rates and project size vary greatly across countries. The main message of this paper is that these broad regularities are consistent with an environment in which a common self-employment technology is available worldwide, but where (a) financial intermediation costs and (b) alternatives in “paid” work differ greatly. Our model indicates that alternatives in paid work are crucial for explaining self-employment rates, whereas high financial intermediation costs primarily affect the scale of projects. We also show that credit use is not informative for predicting either rates of self-employment or the scale of self-employment projects.

Keywords

Self-employment Project scale Development 

JEL Classification

J23 E21 D31 

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Copyright information

© US Government 2009

Authors and Affiliations

  1. 1.Department of EconomicsYork UniversityTorontoCanada
  2. 2.Research DepartmentFederal Reserve Bank of RichmondRichmondUSA

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