Self-Employment, Capital and Job Search: Evidence from a Structural Model

Sign up for meetings on the sheet below (if signing up less than two days before the talk, please also email

We build a structural life-cycle model of sectoral choice and entrepreneurship. Our model allows endogenous career choices, costly job search, capital accumulation and permanent heterogeneity (in both wage productivity and self-employment productivity). We estimate our model using a long panel from urban Ghana, and show that our model fits the data well. Our results imply an important role for search costs and highlights the fundamental role of capital constraints in limiting career opportunities. Our model can provide useful guidance for understanding recent empirical literature in developing countries; we illustrate this by using the model to replicate recent experiments in developing country labour markets.