wealth. These opposing wealth effects will translate into net gains or losses depending on their relative magnitude. More salient, the former tent-shaped region has pervaded this graph - the biggest gainers throughout the entire distribution of wealth are those on the margin of indifference between staying<sup>as</sup> a worker or becoming an entrepreneur in the non-intermediated economy.

The distributions of wealth of the no-credit and intermediated sector are also plotted in Figures 8c and 8d in page 45. Note that the scale has changed. Evidently both are more compressed from what they had been in 1979. Applying those distributions as weights to the diagrams with level wealth<sup>changes</sup> around the 45 degree line, one sees that again those at the low end of wealth would be measured as having extraordinary gains, from zero to ten-fold or more, and again in the credit economy a richer class gains somewhat from the yet high interest rates. The mean welfare gains of those who benefit from the liberalization amount to 52,573 baht or 65,789 1997 baht if we use the No-Credit or Credit distribution, respectively. The modal gains are lower at 6,863 baht or 15,905 baht using the No-Credit and Credit distribution. They correspond to roughly 9 percent and 21 percent, respectively, of the 1996 yearly household income as reported in the SES data. If we translate these modal gains into dollars, we obtain $275 or $636 per year. However, there is also a nontrivial fraction of entrepreneurs who end up losing due to higher wages. The mean losses for this subset of the population amount to 9,509 baht using the No-Credit distribution or 34,816 baht using the Credit distribution. They correspond to roughly 9 percent and 32 percent of the 1996 average household yearly income for the sample of entrepreneurs. In dollars, these losses become $380 and $1,393 using the No Credit and Credit distribution, respectively.

We now turn to the welfare comparison from the simulation using the best fit estimated MLE parameters using the SES data. The first thing to notice is that reported welfare gains are much lower. Two years after the outset of the liberalization, 1978, both economies have the same wage, and therefore the credit liberalization only improves the welfare of those who can take advantage of it. The 3D Figure 9a in page 46 resembles somewhat that of 1979 using the parameters estimated from the Townsend-Thai<sup>data.</sup> It is titled upward as we move along the b axis due to interest earning gains and again, the big winners are those who could not afford the set up cost (even though it was low) and had to take a job as a worker. If credit were available to them, they would become entrepreneurs, realizing huge profits, amounting to an increase in their wealth by a factor of up to nine-fold. The kernel density estimates in Figure 9e and 9g in page 46, however, show that the average wealth increase is somewhat lower, around 100 percent. These correspond to a mean wealth gain of 102,586 baht or 90,785 baht if we use the no-credit or credit distribution, respectively. The modal gains are again much lower, 5,560 baht for the no-credit<sup>or17,000</sup> baht for the credit distribution. These correspond to $222 or $680 at the 1997 exchange rate or, roughly 14 percent or 41 percent of the average household yearly income in 1978.

In 1996, the 3D Figure lOa in page 47 shows that welfare gains are somewhat smaller. Those agents that remain workers in the credit sector are better off because they earn a higher wage, and those that become entrepreneurs in both sectors end up losing because they face higher labor costs. As<sup>in</sup> the Townsend-Thai dataset, if we look at the distribution of welfare gains in Figures 10e and 10e, page 47, there is a significant fraction of agents who end up losing about half of their annual wealth. The<sup>average</sup> wealth gain is still positive at around 100 percent if we use the no-credit wealth distribution and around 80 percent if we use the credit one. But both distributions have negative support, a result of the<sup>fact that</sup> agents benefit in diverse ways from the credit liberalization. The mean welfare gains for those who benefit from the liberalization are 83,444 1997 baht or 76,840 1997 baht for the no-credit and credit distribution, respectively, and correspond to 1.09 times or one time the 1996 average household yearly income. The 22