This paper aims to capture key features of the Ricardo–Viner (RV) and Heckscher–Ohlin (HO) theories in a single dynamic general equilibrium framework. We use a simple 2-sector 2-factor model with adjustment costs associated with the movement of capital across sectors. We analyze the...

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...