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A Model of Unbalanced Growth: The Market versus the Non-market Sector of the Economy

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  • Gemmell, Norman

Abstract

This paper provides an explanation of nonmarket (public) sector growth using a two-sector competitive equilibrium model, which allows for different capital intensities between sectors. The model predicts that higher per capita income levels will be associated with higher shares of both capital and labor, and higher average costs, in the nonmarket sector. The model yields some testable predictions such as rising nominal, relative to real, expenditure on the nonmarket sector as income rises. Evidence from a number of sources appears to support the model's main predictions, including evidence of rising relative costs in the public sector. Copyright 1987 by Royal Economic Society.

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  • Gemmell, Norman, 1987. "A Model of Unbalanced Growth: The Market versus the Non-market Sector of the Economy," Oxford Economic Papers, Oxford University Press, vol. 39(2), pages 253-267, June.
    • Handle: RePEc:oup:oxecpp:v:39:y:1987:i:2:p:253-67
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    Cited by:

    1. Amitava Krishna Dutt, 1989. "Sectoral Balance: A Survey," WIDER Working Paper Series wp-1989-056, World Institute for Development Economic Research (UNU-WIDER).
    2. George A. PROVOPOULOS, 1989. "SOME EVIDENCE ON UNBALANCED PRODUCTIVITY GROWTH: The Case of the Greek Public Sector," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 60(3), pages 359-368, September.

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