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Life During Structural Transformation

Listed author(s):
  • Jonathan Temple

    ()

  • Huikang Ying

We examine whether structural transformation leads to a Kuznets curve. We present a dynamic general equilibrium model with heterogeneous workers, occupational self-selection and selective migration, and calibrate the model to survey data for Malawi. We show that structural transformation raises living standards unevenly. As development proceeds, the movement of workers from agriculture is associated with rising wage inequality, rather than a Kuznets curve. The increase in sectoral wage inequality is pronounced for agriculture. At the same time, structural transformation is associated with major reductions in rural poverty, and eventually in urban poverty.

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File URL: http://www.efm.bris.ac.uk/economics/working_papers/pdffiles/dp14650.pdf
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Paper provided by Department of Economics, University of Bristol, UK in its series Bristol Economics Discussion Papers with number 14/650.

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Length: 38 pages
Date of creation: 28 Nov 2014
Date of revision: 08 Dec 2014
Handle: RePEc:bri:uobdis:14/650
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