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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. Valerie R. Bencivenga & Bruce D. Smith, 1995. "Unemployment, migration, and growth," Working Papers 561, Federal Reserve Bank of Minneapolis.
  2. François Bourguignon, 1990. "Growth and Inequality in the Dual Model of Development: The Role of Demand Factors," Review of Economic Studies, Oxford University Press, vol. 57(2), pages 215-228.
  3. Gary S. Fields, 1979. "A Welfare Economic Approach to Growth and Distribution in the Dual Economy," The Quarterly Journal of Economics, Oxford University Press, vol. 93(3), pages 325-353.
  4. Frances Stewart, 2003. "Income distribution and development," Chapters, in: Trade and Development, chapter 10 Edward Elgar Publishing.
  5. 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.
  6. 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.
  7. 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.
  8. James E. Rauch, 1991. "Economic Development, Urban Underemployment, and Income Inequality," NBER Working Papers 3758, National Bureau of Economic Research, Inc.
  9. 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.
  10. Kaushik C. Basu, 1980. "Optimal Policies in Dual Economies," The Quarterly Journal of Economics, Oxford University Press, vol. 95(1), pages 187-196.
  11. 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.
  12. Kanbur, Ravi, 2000. "Income distribution and development," Handbook of Income Distribution, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 13, pages 791-841 Elsevier.
  13. 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.
  14. W. Bentley MacLeod & James Malcomson, 1997. "Motivation and Markets," Boston College Working Papers in Economics 339., Boston College Department of Economics.
  15. Beladi, Hamid & Naqvi, Nadeem, 1988. "Urban unemployment and non-immiserizing growth," Journal of Development Economics, Elsevier, vol. 28(3), pages 365-376, May.
  16. Bourguignon, Francois & Morrisson, Christian, 1998. "Inequality and development: the role of dualism," Journal of Development Economics, Elsevier, vol. 57(2), pages 233-257.
  17. 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.
  18. Fields, Gary S., 1997. "Wage floors and unemployment: A two-sector analysis," Labour Economics, Elsevier, vol. 4(1), pages 85-91, March.
  19. 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.
  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. 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.
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