We propose a two-region two-sector model of uneven development, where technological change benefits either the lagging or the leading region. In this framework interregional transfers may lead to persistent underdevelopment; by raising wages, transfers reduce the chance of the backward region adopting a new technology and taking off. Due to uncertainty about which region benefits from technological change, the backward region may rationally choose to remain underdeveloped, while the advanced region continues to pay transfers. The model provides a rationale for cases, such as Italy's "Mezzogiorno", where the same rich region subsidizes the same poor region on a continuous basis. Copyright The editors of the "Scandinavian Journal of Economics" 2007 .
Volume (Year): 109 (2007)
Issue (Month): 1 (03)
|Contact details of provider:|| Web page: http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467-9442|
|Order Information:||Web: http://www.blackwellpublishing.com/subs.asp?ref=0347-0520|
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.:
- Stephan Danninger & Alberto Alesina & Massimo V. Rostagno, 1999.
"Redistribution Through Public Employment; The Case of Italy,"
IMF Working Papers
99/177, International Monetary Fund.
- Albert Alesina & Stephan Danninger & Massimo Rostagno, 2001. "Redistribution Through Public Employment: The Case of Italy," IMF Staff Papers, Palgrave Macmillan, vol. 48(3), pages 2.
- Alberto Alesina & Stephan Danninger & Massimo Rostagno, 1999. "Redistribution Through Public Employment: The Case of Italy," NBER Working Papers 7387, National Bureau of Economic Research, Inc.
- Klaus Desmet, 2002. "A Simple Dynamic Model of Uneven Development and Overtaking," Economic Journal, Royal Economic Society, vol. 112(482), pages 894-918, October.
- George A. Akerlof & Andrew K. Rose & Janet L. Yellen & Helga Hessenius, 1991. "East Germany in from the Cold: The Economic Aftermath of Currency Union," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(1), pages 1-106.
- Matsuyama, Kiminori, 1992.
"Agricultural productivity, comparative advantage, and economic growth,"
Journal of Economic Theory,
Elsevier, vol. 58(2), pages 317-334, December.
- Kiminori Matsuyama, 1991. "Agricultural Productivity, Comparative Advantage and Economic Growth," NBER Working Papers 3606, National Bureau of Economic Research, Inc.
- Kiminori Matsuyama, 1990. "Agricultural Productivity, Comparative Advantage, and Economic Growth," Discussion Papers 934, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Kandel, Shmuel & Stambaugh, Robert F., 1991.
"Asset returns and intertemporal preferences,"
Journal of Monetary Economics,
Elsevier, vol. 27(1), pages 39-71, February.
- Persson, Torsten & Tabellini, Guido, 1996. "Federal Fiscal Constitutions: Risk Sharing and Moral Hazard," Econometrica, Econometric Society, vol. 64(3), pages 623-46, May.
- Brunello, Giorgio & Lupi, Claudio & Ordine, Patrizia, 2001. "Widening differences in Italian regional unemployment," Labour Economics, Elsevier, vol. 8(1), pages 103-129, January.
- Hans-Werner Sinn, 2000.
"Germany's Economic Unification: An Assessment after Ten Years,"
NBER Working Papers
7586, National Bureau of Economic Research, Inc.
- Sinn, Hans-Werner, 2002. "Germany's Economic Unification: An Assessment after Ten Years," Review of International Economics, Wiley Blackwell, vol. 10(1), pages 113-28, February.
- Hans-Werner Sinn, 2000. "Germany's Economic Unification. An Assessment after Ten Years," CESifo Working Paper Series 247, CESifo Group Munich.
- Sinn, Hans-Werner, 2002. "Germany’s Economic Unification: An Assessment after Ten Years," Munich Reprints in Economics 19643, University of Munich, Department of Economics.
- Klaus Desmet & Ignacio Ortuño Ortín, 2007.
Scandinavian Journal of Economics,
Wiley Blackwell, vol. 109(1), pages 1-24, 03.
- Hans-Werner Sinn & Frank Westermann, 2000.
CESifo Working Paper Series
378, CESifo Group Munich.
- Alesina, Alberto & Perotti, Roberto, 1998.
"Economic Risk and Political Risk in Fiscal Unions,"
Royal Economic Society, vol. 108(449), pages 989-1008, July.
- Boltho, Andrea & Carlin, Wendy & Scaramozzino, Pasquale, 1997.
"Will East Germany Become a New Mezzogiorno?,"
Journal of Comparative Economics,
Elsevier, vol. 24(3), pages 241-264, June.
- Persson, Torsten & Tabellini, Guido, 1996. "Federal Fiscal Constitutions: Risk Sharing and Redistribution," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 979-1009, October.
- Bolton, Patrick & Roland, Gérard, 1995.
"The Break up of Nations: A Political Economy Analysis,"
CEPR Discussion Papers
1225, C.E.P.R. Discussion Papers.
- Bolton, Patrick & Roland, Gerard, 1997. "The Breakup of Nations: A Political Economy Analysis," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1057-90, November.
- Bayoumi, Tamim & Masson, Paul R, 1994.
"Fiscal Flows in the United States and Canada: Lessons for Monetary Union in Europe,"
CEPR Discussion Papers
1057, C.E.P.R. Discussion Papers.
- Bayoumi, Tamim & Masson, Paul R., 1995. "Fiscal flows in the United States and Canada: Lessons for monetary union in Europe," European Economic Review, Elsevier, vol. 39(2), pages 253-274, February.
- Wildasin, D.E., 1992.
"Income Restribution and Migration,"
92-003, Indiana - Center for Econometric Model Research.
- Mehra, Rajnish & Prescott, Edward C., 1985.
"The equity premium: A puzzle,"
Journal of Monetary Economics,
Elsevier, vol. 15(2), pages 145-161, March.
- Gerlinde Sinn & Hans-Werner Sinn, 1994. "Jumpstart: The Economic Unification of Germany," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262691728, June.
- Krugman, Paul, 1987. "The narrow moving band, the Dutch disease, and the competitive consequences of Mrs. Thatcher : Notes on trade in the presence of dynamic scale economies," Journal of Development Economics, Elsevier, vol. 27(1-2), pages 41-55, October.
- Basile, Roberto & Padoa Schioppa, Fiorella Kostoris, 2002. "Unemployment Dynamics of the 'Mezzogiornos of Europe': Lessons for the Mezzogiorno of Italy," CEPR Discussion Papers 3594, C.E.P.R. Discussion Papers.
- Brezis, Elise S & Krugman, Paul R & Tsiddon, Daniel, 1993. "Leapfrogging in International Competition: A Theory of Cycles in National Technological Leadership," American Economic Review, American Economic Association, vol. 83(5), pages 1211-19, December.
When requesting a correction, please mention this item's handle: RePEc:bla:scandj:v:109:y:2007:i:1:p:1-24. See general information about how to correct material in RePEc.
If references are entirely missing, you can add them using this form.