What Determines Self-employment Choice in India?

Part of the International Studies in Entrepreneurship book series (ISEN, volume 19)

5.1 Introduction

In the last two decades, a vast literature has emerged that aims to explain the characteristics of entrepreneurs, the determinants of occupational choice of individuals and the contexts that promote entrepreneurship.1 However, until recently, the entrepreneurship literature has largely ignored the labor markets of developing countries.

Beginning with the labor surplus model of Lewis (1954), the labor markets of developing countries are viewed as segmented dualistic markets along the formal-informal lines (also see Sen, 1966; Ranis and Fei, 1961; Harris and Todaro, 1970).2 Some studies find evidence against these theories of low level subsisting self-employment in LDCs (Majumdar, 1981; Blau, 1986; Rosenzweig, 1980; Mohapatra et al., 2007). Thus, more recently, a growing body of literature attempts to capture the heterogeneity within the informal sector. This strand of literature argues that the informal sector is a blend of both disadvantaged and competitive sectors...


Informal Sector Education Variable Domestic Duty National Sample Survey Organization Land Variable 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


  1. Audretsch, D., Bönte, W., and Tamvada, J. P. (2007). Religion and entrepreneurship. CEPR Discussion Paper no. 6378. Center for Economic Policy Research, London.Google Scholar
  2. Blanchflower, D. G. (2000). Self-employment in OECD countries. Labour Economics, 7(5):471–505.CrossRefGoogle Scholar
  3. Blanchflower, D. G. and Meyer, B. D. (1994). A longitudinal analysis of young entrepreneurs in Australia and the United States. Small Business Economics, 6(1):1–19.CrossRefGoogle Scholar
  4. Blau, D. M. (1986). Self-employment, earnings, and mobility in peninsular Malaysia. World Development, 14(7):839–852.CrossRefGoogle Scholar
  5. Cunningham, W. V. and Maloney, W. F. (2001). Heterogeneity in the Mexican micro-enterprise sector. Economic Development and Cultural Change, 50:131–156.CrossRefGoogle Scholar
  6. Fairlie, R. W. and Meyer, B. D. (1996). Ethnic and racial self-employment: Differences and possible explanations. Journal of Human Resources, 31(4):757–793.CrossRefGoogle Scholar
  7. Fields, G. S. (2005). A guide to multisector labor market models. Social Protection Discussion Paper Series No. 0505, World Bank.Google Scholar
  8. Fuchs, V. R. (1982). Self-employment and labor force participation of older males. The Journal of Human Resources, 17(3):339–357.CrossRefGoogle Scholar
  9. Günther, I. and Launov, A. (2006). Competitive and segmented informal labor markets. IZA Discussion Papers 2349, Institute for the Study of Labor (IZA).Google Scholar
  10. Harris, J. R. and Todaro, M. P. (1970). Migration, unemployment and development: A two sector analysis. American Economic Review, 60(1):126–142.Google Scholar
  11. Lewis, A. W. (1954). Economic Development with Unlimuted Supplies of Labour.Google Scholar
  12. Majumdar, D. (1981). The Urban Labor Market and Income Distribution - A Study of Malaysia. Oxford University Press, Oxford.Google Scholar
  13. Maloney, W. F. (2004). Informality revisited. World Development, 32(7):1159–1178.CrossRefGoogle Scholar
  14. Mohapatra, S., Rozelle, S., and Goodhue, R. (2007). The rise of self-employment in rural China: Development or distress? World Development, 35(1):163–181.CrossRefGoogle Scholar
  15. Parker, S. C. (2004). The Economics of Self-Employment and Entrepreneurship. Cambridge University Press, Cambridge.CrossRefGoogle Scholar
  16. Ranis, G. and Fei, J. (1961). A theory of economic development. American Economic Review, 51:533–565.Google Scholar
  17. Rosenzweig, M. R. (1980). Neoclassical theory and the optimizing peasant: An econometric analysis of market family labour supply in a developing country. Quarterly Journal of Economics, 94(1):31–55.CrossRefGoogle Scholar
  18. Sen, A. K. (1966). Peasants and dualism with or without surplus labor. Journal of Political Economy, 74:425–450.CrossRefGoogle Scholar
  19. Tamvada, J. P. (2007). Essays on entrepreneurship and economic development. PhD thesis, University of Göttingen.Google Scholar

Copyright information

© Springer Science + Business Media, LLC 2008

Authors and Affiliations

  1. 1.Max Planck Institute of EconomicsJenaGermany

Personalised recommendations