This paper extends Evans and Jovanovic (1989)'s entrepreneurship model to incorporate the informal sector. Specifically, entrepreneurs can operate either in the formal sector - in which they have limited access to credit markets and must pay taxes - or in the informal sector - in which they can...

This paper extends Evans and Jovanovic (1989)'s entrepreneurship model to incorporate the informal sector. Specifically, entrepreneurs can operate either in the formal sector – in which they have limited access to credit markets and must pay taxes – or in the informal sector – in which...