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The Dual Economy in Long-run Development

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Author Info
Dietz Vollrath () (Department of Economics, University of Houston)

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Abstract

This paper provides a dynamic model of the dual economy in which differences in productivity across sectors arise endogenously. Rather than relying on exogenous price distortions, duality arises because of differences between sectors in the separability of their fertility and labor decisions. The model demon- strates how a dual economy will originate, persist, and eventually disappear within a unified growth framework. It is also shown that agricultural productivity growth will exacerbate the ine±ciencies of a dual economy and slow down long-run growth.

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File URL: http://www.uh.edu/econpapers/RePEc/hou/wpaper/2008-03.pdf
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Publisher Info
Paper provided by Department of Economics, University of Houston in its series Working Papers with number 2008-03.

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Length: 28 pages
Date of creation: Nov 2008
Date of revision:
Handle: RePEc:hou:wpaper:2008-03

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Postal: Houston TX 77023
Web page: http://www.uh.edu/academics/sos/econ/
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Related research
Keywords: Dual economy; unfied growth; endogenous fertility;

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Find related papers by JEL classification:
O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
O13 - Economic Development, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    Other versions:
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  17. Matsuyama, Kiminori, 1992. "Agricultural productivity, comparative advantage, and economic growth," Journal of Economic Theory, Elsevier, vol. 58(2), pages 317-334, December. [Downloadable!] (restricted)
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  18. Piyabha Kongsamut & Danyang Xie & Sergio Rebelo, 2001. "Beyond Balanced Growth," IMF Working Papers 01/85, International Monetary Fund.
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  19. Galor, Oded, 2004. "From Stagnation to Growth: Unified Growth Theory," CEPR Discussion Papers 4581, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  20. Vollrath, Dietrich, 2009. "How important are dual economy effects for aggregate productivity?," Journal of Development Economics, Elsevier, vol. 88(2), pages 325-334, March. [Downloadable!] (restricted)
  21. Tamura, Robert, 2002. "Human capital and the switch from agriculture to industry," Journal of Economic Dynamics and Control, Elsevier, vol. 27(2), pages 207-242, December. [Downloadable!] (restricted)
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  23. Goodfriend, Marvin & McDermott, John, 1995. "Early Development," American Economic Review, American Economic Association, vol. 85(1), pages 116-33, March. [Downloadable!] (restricted)
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  24. Jones, Charles I, 1995. "Time Series Tests of Endogenous Growth Models," The Quarterly Journal of Economics, MIT Press, vol. 110(2), pages 495-525, May. [Downloadable!] (restricted)
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  29. David de la Croix & Matthias Doepke, 2003. "Inequality and Growth: Why Differential Fertility Matters," American Economic Review, American Economic Association, vol. 93(4), pages 1091-1113, September. [Downloadable!]
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  30. Areendam Chanda & Carl-Johan Dalgaard, 2008. "Dual Economies and International Total Factor Productivity Differences: Channelling the Impact from Institutions, Trade, and Geography," Economica, London School of Economics and Political Science, vol. 75(300), pages 629-661, November. [Downloadable!] (restricted)
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