IDEAS home Printed from https://ideas.repec.org/a/bla/buecrs/v57y2005i2p145-169.html
   My bibliography  Save this article

Growth and Wage Inequality in a Dual Economy

Author

Listed:
  • Jonathan R. W. Temple

Abstract

Who benefits from economic growth? This paper analyses the distributional impact of different types of growth within a two‐sector model. The paper first presents necessary and sufficient conditions for unambiguous changes in wage inequality in a dual economy, based on analysis of the entire Lorenz curve. These conditions are then applied to the Harris–Todaro model with an urban non‐agricultural sector and rural agriculture. It is shown that capital accumulation or technical progress in agriculture can shift the Lorenz curve inwards and reduce wage inequality, while the effects of development in non‐agriculture are typically ambiguous.

Suggested Citation

  • Jonathan R. W. Temple, 2005. "Growth and Wage Inequality in a Dual Economy," Bulletin of Economic Research, Wiley Blackwell, vol. 57(2), pages 145-169, April.
  • Handle: RePEc:bla:buecrs:v:57:y:2005:i:2:p:145-169
    DOI: 10.1111/j.0307-3378.2005.00218.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.0307-3378.2005.00218.x
    Download Restriction: no

    File URL: https://libkey.io/10.1111/j.0307-3378.2005.00218.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Kjell Erik Lommerud & Bjørn Sandvik & Odd Rune Straume, 2004. "Good Jobs, Bad Jobs and Redistribution," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(4), pages 703-720, December.
    2. Bencivenga, Valerie R & Smith, Bruce D, 1997. "Unemployment, Migration, and Growth," Journal of Political Economy, University of Chicago Press, vol. 105(3), pages 582-608, June.
    3. Bryan Graham & Jonathan Temple, 2006. "Rich Nations, Poor Nations: How Much Can Multiple Equilibria Explain?," Journal of Economic Growth, Springer, vol. 11(1), pages 5-41, March.
    4. Bhagwati, Jagdish N & Srinivasan, T N, 1974. "On Reanalyzing the Harris-Todaro Model: Policy Rankings in the Case of Sector-Specific Sticky Wages," American Economic Review, American Economic Association, vol. 64(3), pages 502-508, June.
    5. repec:bla:econom:v:57:y:1990:i:227:p:371-82 is not listed on IDEAS
    6. Ravallion, Martin, 2002. "On the urbanization of poverty," Journal of Development Economics, Elsevier, vol. 68(2), pages 435-442, August.
    7. François Bourguignon, 1990. "Growth and Inequality in the Dual Model of Development: The Role of Demand Factors," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 57(2), pages 215-228.
    8. Ravallion, Martin, 2001. "Growth, Inequality and Poverty: Looking Beyond Averages," World Development, Elsevier, vol. 29(11), pages 1803-1815, November.
    9. Srinivasan, T. N. & Bhagwati, Jagdish, 1975. "Alternative policy rankings in a large, open economy with sector-specific, minimum wages," Journal of Economic Theory, Elsevier, vol. 11(3), pages 356-371, December.
    10. Anand, Sudhir & Kanbur, S. M. R., 1993. "The Kuznets process and the inequality--development relationship," Journal of Development Economics, Elsevier, vol. 40(1), pages 25-52, February.
    11. Henrik Jacobsen Kleven & Peter Birch Sørensen, 2004. "Labour Tax Reform, the Good Jobs and the Bad Jobs," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(1), pages 45-64, March.
    12. MacLeod, W Bentley & Malcomson, James M, 1998. "Motivation and Markets," American Economic Review, American Economic Association, vol. 88(3), pages 388-411, June.
    13. Eswaran, Mukesh & Kotwal, Ashok, 1993. "A theory of real wage growth in LDCs," Journal of Development Economics, Elsevier, vol. 42(2), pages 243-269, December.
    14. Todaro, Michael P, 1969. "A Model for Labor Migration and Urban Unemployment in Less Developed Countries," American Economic Review, American Economic Association, vol. 59(1), pages 138-148, March.
    15. Chakravarty, Satya R. & Dutta, Bhaskar, 1990. "Migration and welfare," European Journal of Political Economy, Elsevier, vol. 6(1), pages 119-138, August.
    16. Layard, Richard, 2004. "Good jobs and bad jobs," LSE Research Online Documents on Economics 28757, London School of Economics and Political Science, LSE Library.
    17. Hoddinott, John, 1996. "Wages and Unemployment in an Urban African Labour Market," Economic Journal, Royal Economic Society, vol. 106(439), pages 1610-1626, November.
    18. Kanbur, S M Ravi & McIntosh, James P, 1988. "Dual Economy Models: Retrospect and Prospect," Bulletin of Economic Research, Wiley Blackwell, vol. 40(2), pages 83-113, April.
    19. Gary S. Fields, 1979. "A Welfare Economic Approach to Growth and Distribution in the Dual Economy," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 93(3), pages 325-353.
    20. Charles A. Ingene, 2001. "The State of the Art in Modeling Migration in LDCS: A Comment," Journal of Regional Science, Wiley Blackwell, vol. 41(3), pages 529-543, August.
    21. Bourguignon, Francois & Morrisson, Christian, 1998. "Inequality and development: the role of dualism," Journal of Development Economics, Elsevier, vol. 57(2), pages 233-257.
    22. repec:bla:econom:v:42:y:1975:i:165:p:59-78 is not listed on IDEAS
    23. James E. Rauch, 1993. "Economic Development, Urban Underemployment, and Income Inequality," Canadian Journal of Economics, Canadian Economics Association, vol. 26(4), pages 901-918, November.
    24. Rodrik, Dani, 1996. "Coordination failures and government policy: A model with applications to East Asia and Eastern Europe," Journal of International Economics, Elsevier, vol. 40(1-2), pages 1-22, February.
    25. Gupta, Manash Ranjan, 1994. "Foreign capital, income inequality and welfare in a Harris-Todaro model," Journal of Development Economics, Elsevier, vol. 45(2), pages 407-414, December.
    26. Oded Stark, 1991. "The Migration of Labor," Blackwell Books, Wiley Blackwell, number 1557860300.
    27. Ravallion, Martin & Datt, Gaurav, 1996. "How Important to India's Poor Is the Sectoral Composition of Economic Growth?," The World Bank Economic Review, World Bank, vol. 10(1), pages 1-25, January.
    28. Shigemi Yabuuchi, 1998. "Urban Unemployment, Factor Accumulation, and Welfare," Review of Development Economics, Wiley Blackwell, vol. 2(1), pages 31-40, February.
    29. Fields, Gary S., 1989. "On-the-job search in a labor market model : Ex ante choices and ex post outcomes," Journal of Development Economics, Elsevier, vol. 30(1), pages 159-178, January.
    30. Svejnar, Jans, 1989. "Models of modern-sector labor market institutions in developing countries," World Development, Elsevier, vol. 17(9), pages 1409-1415, September.
    31. Kaushik C. Basu, 1980. "Optimal Policies in Dual Economies," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 95(1), pages 187-196.
    32. Gupta, Manash Ranjan, 1988. "Migration, Welfare, Inequality and Shadow Wage," Oxford Economic Papers, Oxford University Press, vol. 40(3), pages 477-486, September.
    33. Ravallion, Martin & Datt, Gaurav, 2002. "Why has economic growth been more pro-poor in some states of India than others?," Journal of Development Economics, Elsevier, vol. 68(2), pages 381-400, August.
    34. Agell, Jonas & Lommerud, Kjell Erik, 1997. "Minimum wages and the incentives for skill formation," Journal of Public Economics, Elsevier, vol. 64(1), pages 25-40, April.
    35. Lipton, Michael, 1980. "Migration from rural areas of poor countries: The impact on rural productivity and income distribution," World Development, Elsevier, vol. 8(1), pages 1-24, January.
    36. Beladi, Hamid & Naqvi, Nadeem, 1988. "Urban unemployment and non-immiserizing growth," Journal of Development Economics, Elsevier, vol. 28(3), pages 365-376, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jonathan Temple, 2002. "Wage Inequality in a Dual Economy," Bristol Economics Discussion Papers 02/531, School of Economics, University of Bristol, UK.
    2. Lall, Somik V. & Selod, Harris & Shalizi, Zmarak, 2006. "Rural-urban migration in developing countries : a survey of theoretical predictions and empirical findings," Policy Research Working Paper Series 3915, The World Bank.
    3. M. Ali Khan, 2007. "The Harris-Todaro Hypothesis," Labor Economics Working Papers 22206, East Asian Bureau of Economic Research.
    4. Jonathan Temple, 2002. "The Costs of Dualism," Bristol Economics Discussion Papers 02/532, School of Economics, University of Bristol, UK.
    5. Temple, Jonathan & Ying, Huikang, 2014. "Life During Structural Transformation," CEPR Discussion Papers 10297, C.E.P.R. Discussion Papers.
    6. Jonathan Temple, 2005. "Dual Economy Models: A Primer For Growth Economists," Manchester School, University of Manchester, vol. 73(4), pages 435-478, July.
    7. Bourguignon, Francois, 2005. "The Effect of Economic Growth on Social Structures," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 27, pages 1701-1747, Elsevier.
    8. Fields,Gary S., 2005. "A guide to multisector labor market models," Social Protection and Labor Policy and Technical Notes 32547, The World Bank.
    9. Fields, Gary S., 2005. "A welfare economic analysis of labor market policies in the Harris-Todaro model," Journal of Development Economics, Elsevier, vol. 76(1), pages 127-146, February.
    10. Sarbajit Chaudhuri & Sushobhan Mahata & Salonkara Chaudhuri, 2022. "COVID-19 disaster and employment generation program in a developing economy," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 24(1), pages 46-64, June.
    11. Donald S. Allen & Leonce Ndikumana, 1999. "Income inequality and minimum consumption: implications for growth," Working Papers 1999-013, Federal Reserve Bank of St. Louis.
    12. Martins, Ana Paula, 2008. "Bilateral mobility in dualistic models," Economic Modelling, Elsevier, vol. 25(3), pages 391-410, May.
    13. Vincenzo Lombardo, 2012. "Modern foundations of dual economy models," Discussion Papers 8_2012, CRISEI, University of Naples "Parthenope", Italy.
    14. Martins, Ana Paula, 2014. "The Mechanics of Dualistic Models: "Comparable" Structures and Comparative Statics Results," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 1(2), pages 150-185.
    15. Ana Paula Martins, 2011. "Compliance with the Institutional Wage in Dualistic Models," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 54(2), pages 93-126.
    16. Chaudhuri, Sarbajit, 2007. "Foreign capital, welfare and urban unemployment in the presence of agricultural dualism," Japan and the World Economy, Elsevier, vol. 19(2), pages 149-165, March.
    17. Bourguignon, Francois & Morrisson, Christian, 1998. "Inequality and development: the role of dualism," Journal of Development Economics, Elsevier, vol. 57(2), pages 233-257.
    18. Luc Christiaensen & Lionel Demery & Jesper Kühl, 2010. "The (Evolving) Role of Agriculture in Poverty Reduction," WIDER Working Paper Series wp-2010-036, World Institute for Development Economic Research (UNU-WIDER).
    19. Lee, Chul-In, 2008. "Migration and the wage and unemployment gaps between urban and non-urban sectors: A dynamic general equilibrium reinterpretation of the Harris-Todaro equilibrium," Labour Economics, Elsevier, vol. 15(6), pages 1416-1434, December.
    20. Christiaensen, Luc & Demery, Lionel & Kuhl, Jesper, 2011. "The (evolving) role of agriculture in poverty reduction--An empirical perspective," Journal of Development Economics, Elsevier, vol. 96(2), pages 239-254, November.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:buecrs:v:57:y:2005:i:2:p:145-169. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0307-3378 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.