{"title":"Occupational mismatch and market power","authors":"Felipe Balmaceda","doi":"10.1016/j.jdeveco.2025.103536","DOIUrl":null,"url":null,"abstract":"<div><div>This paper shows that local labor market power provides a rationale for the higher prevalence of self-employment in developing economies relative to developed economies. Labor market power creates occupational mismatch–too many workers choose self-employment relative to the competitive benchmark. Because of labor market power, workers underinvest in skills that increase paid employment productivity and overinvest in those that enhance self-employment productivity. Under certain conditions, this exacerbates the occupational mismatch. We also consider a quantity-type product market competition model where self-employed individuals form a competitive fringe. Product-market competition increases the intensity of competition for workers and reduces occupational mismatch.</div></div>","PeriodicalId":48418,"journal":{"name":"Journal of Development Economics","volume":"177 ","pages":"Article 103536"},"PeriodicalIF":5.1000,"publicationDate":"2025-06-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of Development Economics","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0304387825000872","RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 0
Abstract
This paper shows that local labor market power provides a rationale for the higher prevalence of self-employment in developing economies relative to developed economies. Labor market power creates occupational mismatch–too many workers choose self-employment relative to the competitive benchmark. Because of labor market power, workers underinvest in skills that increase paid employment productivity and overinvest in those that enhance self-employment productivity. Under certain conditions, this exacerbates the occupational mismatch. We also consider a quantity-type product market competition model where self-employed individuals form a competitive fringe. Product-market competition increases the intensity of competition for workers and reduces occupational mismatch.
期刊介绍:
The Journal of Development Economics publishes papers relating to all aspects of economic development - from immediate policy concerns to structural problems of underdevelopment. The emphasis is on quantitative or analytical work, which is relevant as well as intellectually stimulating.