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The Dual Economy in Long-run Development

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Vollrath, Dietrich

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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 demonstrates 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 inefficiencies of a dual economy and slow down long-run growth.

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File URL: http://mpra.ub.uni-muenchen.de/12293/
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 12293.

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Date of creation: 18 Dec 2008
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Handle: RePEc:pra:mprapa:12293

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Related research
Keywords: Dual economy; unified 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
O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
O13 - Economic Development, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General

This paper has been announced in the following NEP Reports:

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.:
  1. Oded Galor & Andrew Mountford, 2008. "Trading Population for Productivity: Theory and Evidence," Working Papers 2008-2, Brown University, Department of Economics. [Downloadable!]
    Other versions:
  2. Alex Mourmouras & Peter Rangazad, 2007. "Reconciling Kuznets and Habbakuk in a Unified Growth Theory," Working Papers wp200704, Indiana University-Purdue University Indianapolis, Department of Economics. [Downloadable!]
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  6. Oded Galor & Omer Moav, 2002. "Natural Selection And The Origin Of Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 117(4), pages 1133-1191, November. [Downloadable!] (restricted)
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  7. Laitner, John, 2000. "Structural Change and Economic Growth," Review of Economic Studies, Blackwell Publishing, vol. 67(3), pages 545-61, July.
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  10. Kogel, Tomas & Prskawetz, Alexia, 2001. " Agricultural Productivity Growth and Escape from the Malthusian Trap," Journal of Economic Growth, Springer, vol. 6(4), pages 337-57, December. [Downloadable!] (restricted)
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  11. Temple, Jonathan & Woessmann, Ludger, 2006. "Dualism and Cross-Country Growth Regressions," CEPR Discussion Papers 5655, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  12. Benjamin, Dwayne, 1992. "Household Composition, Labor Markets, and Labor Demand: Testing for Separation in Agricultural Household Models," Econometrica, Econometric Society, vol. 60(2), pages 287-322, March. [Downloadable!] (restricted)
  13. Oded Galor & Omar Moav & Dietrich Vollrath, 2006. "Inequality in Land Ownership, the Emergence of Human Capital Promoting Institutions, and the Great Divergence," DEGIT Conference Papers c011_001, DEGIT, Dynamics, Economic Growth, and International Trade. [Downloadable!]
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  14. Douglas Gollin & Stephen L. Parente & Richard Rogerson, 2004. "Farm Work, Home Work, and International Productivity Differences," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 7(4), pages 827-850, October. [Downloadable!] (restricted)
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  15. Oded Galor, 2006. "The Demographic Transition," Working Papers 2006-24, Brown University, Department of Economics. [Downloadable!]
  16. Jacob L. Weisdorf, 2006. "From domestic manufacture to Industrial Revolution: long-run growth and agricultural development," Oxford Economic Papers, Oxford University Press, vol. 58(2), pages 264-287, April. [Downloadable!] (restricted)
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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.
    Other versions:
  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)
  22. Gary D. Hansen & Edward C. Prescott, 2002. "Malthus to Solow," American Economic Review, American Economic Association, vol. 92(4), pages 1205-1217, September. [Downloadable!]
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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)
  25. Holger Strulik & Jacob Weisdorf, 2008. "Population, food, and knowledge: a simple unified growth theory," Journal of Economic Growth, Springer, vol. 13(3), pages 195-216, September. [Downloadable!] (restricted)
  26. Ranis, Gustav, 1988. "Analytics of development: Dualism," Handbook of Development Economics, in: Hollis Chenery† & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 1, chapter 4, pages 73-92 Elsevier. [Downloadable!] (restricted)
  27. Dahan, Momi & Tsiddon, Daniel, 1998. " Demographic Transition, Income Distribution, and Economic Growth," Journal of Economic Growth, Springer, vol. 3(1), pages 29-52, March. [Downloadable!] (restricted)
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  28. Jonathan Temple, 2005. "Dual Economy Models: A Primer For Growth Economists," Manchester School, University of Manchester, vol. 73(4), pages 435-478, 07. [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)
  31. Banerjee, Abhijit V. & Duflo, Esther, 2005. "Growth Theory through the Lens of Development Economics," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 7, pages 473-552 Elsevier. [Downloadable!] (restricted)
  32. Douglas Gollin & Stephen Parente & Richard Rogerson, 2002. "The Role of Agriculture in Development," American Economic Review, American Economic Association, vol. 92(2), pages 160-164, May. [Downloadable!]
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