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Structural Change and Regional Convergence: The Case of Declining Transport Costs

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  • Trevor Tombe

    ()
    (Wilfrid Laurier University)

Abstract

Regional income inequality within countries is an important contributor to global inequality. I investigate its relationship to economic growth using the US experience since 1880. I modify a multi-sector general equilibrium growth model and highlight two important forces: (1) structural change, which disproportionately benefit poor agricultural regions; and (2) transport cost reductions, which shrinks regional price and wage differences. Structural change contributes to Southern growth but is offset in the Midwest by transport cost reductions. The Midwest case is of greater relevance for developing countries with high transport costs, and suggests growth may not significantly reduce global income inequality.

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Bibliographic Info

Paper provided by Wilfrid Laurier University, Department of Economics in its series Working Papers with number tt0061.

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Length: 28
Date of creation: 2012
Date of revision: 2012
Handle: RePEc:wlu:wpaper:tt0061

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Keywords: Regional Convergence; Dual-Economy Models; Transportation Costs;

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  1. Paci, Raffaele & Pigliaru, Francesco, 1997. "Structural change and convergence: an Italian regional perspective," Structural Change and Economic Dynamics, Elsevier, vol. 8(3), pages 297-318, August.
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  12. Zhang, Xiaobo & Kanbur, Ravi, 2005. "Spatial inequality in education and health care in China," China Economic Review, Elsevier, vol. 16(2), pages 189-204.
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  15. Douglas Gollin & Richard Rogerson, 2014. "Agriculture, Roads, and Economic Development in Uganda," NBER Chapters, in: African Successes: Sustainable Growth National Bureau of Economic Research, Inc.
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