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Intersectoral size differences and migration: Kuznets revisited

  • Nejat Anbarci
  • Mehmet Ulubasoğlu

That researchers look for the inverted-U shape in inequality in the arbitrary periods of arbitrary countries underlies the divergent empirical evidence across studies. To point to the right context for the pattern, this paper establishes a formal mechanism in line with Kuznets' explanation that relates to the industrialization-cum-urbanization phases of closed trade regimes. The mechanism involves an interaction among urban-rural sectoral size differences, agricultural tastes/income, and migration, and predicts an inverted-U shape in inequality in the following way: (i) widening differences in the sizes of urban and rural sectors due to exogenous shocks affect negatively the agricultural tastes/income, worsening inequality; (ii) increasing sectoral size differences and decreasing agricultural tastes/income jointly foster intersectoral migration; (iii) migration acts, in turn, as an equilibrating effect, improving the income distribution. Empirically testing these predictions, non-Sub-Saharan developing countries' data support the mechanism, while data from developed and Sub-Saharan African countries provide little support, as per our prior expectations. This highlights a contrasting evidence on the inverted-U shape across country groups of differing development stages.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/09638199.2011.538232
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Article provided by Taylor & Francis Journals in its journal The Journal of International Trade & Economic Development.

Volume (Year): 20 (2011)
Issue (Month): 2 ()
Pages: 251-292

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Handle: RePEc:taf:jitecd:v:20:y:2011:i:2:p:251-292
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