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Wage Inequality in a Dual Economy

  • Jonathan Temple

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This paper 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 used to analyze the distributional consequences of various types of economic growth. In particular, it is shown that capital accumulation or technical progress in agriculture is likely to reduce wage inequality, but the effects of development in non-agriculture are typically ambiguous. The paper also discusses the implications of this analysis for the Kuznets curve.

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File URL: http://www.efm.bris.ac.uk/economics/working_papers/pdffiles/dp02531.pdf
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Paper provided by Department of Economics, University of Bristol, UK in its series Bristol Economics Discussion Papers with number 02/531.

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Length: 23 pages
Date of creation: Apr 2002
Date of revision:
Handle: RePEc:bri:uobdis:02/531
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  1. MacLeod, W Bentley & Malcomson, James M, 1998. "Motivation and Markets," American Economic Review, American Economic Association, vol. 88(3), pages 388-411, June.
  2. 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.
  3. Bourguignon, Francois & Morrisson, Christian, 1998. "Inequality and development: the role of dualism," Journal of Development Economics, Elsevier, vol. 57(2), pages 233-257.
  4. 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.
  5. 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.
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  7. 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.
  8. Jeremiah. Allen, 2001. "The State of the Art in Modeling Migration in the LDCS: A Comment," Journal of Regional Science, Wiley Blackwell, vol. 41(3), pages 521-528.
  9. Fields, Gary S., 1997. "Wage floors and unemployment: A two-sector analysis," Labour Economics, Elsevier, vol. 4(1), pages 85-91, March.
  10. Bourguignon, Francois, 1990. "Growth and Inequality in the Dual Model of Development: The Role of Demand Factors," Review of Economic Studies, Wiley Blackwell, vol. 57(2), pages 215-28, April.
  11. Basu, Kaushik C, 1980. "Optimal Policies in Dual Economies," The Quarterly Journal of Economics, MIT Press, vol. 95(1), pages 187-96, August.
  12. 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.
  13. Frances Stewart, . "Income Distribution and Development," QEH Working Papers qehwps37, Queen Elizabeth House, University of Oxford.
  14. Fields, Gary S, 1979. "A Welfare Economic Approach to Growth and Distribution in the Dual Economy," The Quarterly Journal of Economics, MIT Press, vol. 93(3), pages 325-53, August.
  15. 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.
  16. Beladi, Hamid & Naqvi, Nadeem, 1988. "Urban unemployment and non-immiserizing growth," Journal of Development Economics, Elsevier, vol. 28(3), pages 365-376, May.
  17. James E. Rauch, 1993. "Economic Development, Urban Underemployment, and Income Inequality," Canadian Journal of Economics, Canadian Economics Association, vol. 26(4), pages 901-18, November.
  18. Kanbur, Ravi, 1998. "Income Distribution and Development," Working Papers 179323, Cornell University, Department of Applied Economics and Management.
  19. 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.
  20. Chakravarty, Satya R. & Dutta, Bhaskar, 1990. "Migration and welfare," European Journal of Political Economy, Elsevier, vol. 6(1), pages 119-138, August.
  21. Hoddinott, John, 1996. "Wages and Unemployment in an Urban African Labour Market," Economic Journal, Royal Economic Society, vol. 106(439), pages 1610-26, November.
  22. Corden, W M & Findlay, Ronald, 1975. "Urban Unemployment, Intersectoral Capital Mobility and Development Policy," Economica, London School of Economics and Political Science, vol. 42(165), pages 59-78, February.
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