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Intersectoral Size Differences and Migration: Kuznets Revisited

The empirical evidence on the Kuznets hypothesis ranges from positive or negative support to insignificant relationships. Most studies typically try this hypothesis in domains different than the one conceived by Kuznets, which pertains to the industrialization-led urbanization (i.e., significant rural-urban migration) phases of societies. In this paper, we offer a specific channel on Kuznets' hypothesis in his suggested domain. First, we establish theoretically that intersectoral urban-rural size differences result in an intersectoral migration, which works as an equilibriating mechanism in the economy, decreasing the inequality in due course. We then successfully test the predictions of the model. The theoretical predictions yield a recursive triangler system, in which we test, i)how the sectoral size differences influence the agricultural tastes/income, ii) how a change in agricultural tastes/income acts on migration, and iii) what happens to the income distribution as a result of migration. We find a very strong support for the theoretical predictions and the Kuznets hypothesis in its own domain.

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Paper provided by Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance in its series Economics Series with number 2005_16.

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Length: 41 pages
Date of creation: 17 Oct 2005
Date of revision:
Handle: RePEc:dkn:econwp:eco_2005_16
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  1. Esther Duflo & Christopher Udry, 2003. "Intrahousehold Resource Allocation in Côte D'ivoire: Social Norms, Separate Accounts and Consumption Choices," Working Papers 857, Economic Growth Center, Yale University.
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  9. Gábor Kézdi & Robert J. Willis, 2003. "Who Becomes a Stockholder? Expectations, SUbjective Uncertainty, and Asset Allocation," Working Papers wp039, University of Michigan, Michigan Retirement Research Center.
  10. James M. Poterba & Andrew Samwick, 2001. "Household Portfolio Allocation over the Life Cycle," NBER Chapters, in: Aging Issues in the United States and Japan, pages 65-104 National Bureau of Economic Research, Inc.
  11. Richard Burkhauser & Greg Duncan & Richard Hauser & Roland Berntsen, 1991. "Wife or frau, women do worse: A comparison of men and women in the United States and Germany after marital dissolution," Demography, Springer, vol. 28(3), pages 353-360, August.
  12. Matthew McKeever & Nicholas H. Wolfinger, 2001. "Reexamining the Economic Costs of Marital Disruption for Women," Social Science Quarterly, Southwestern Social Science Association, vol. 82(1), pages 202-217.
  13. Siwan Anderson, 2000. "The Economics of Roscas and Intra-Household Resource Allocation," Econometric Society World Congress 2000 Contributed Papers 1323, Econometric Society.
  14. Burkhauser, Richard V, et al, 1990. "Economic Burdens of Marital Disruptions: A Comparison of the United States and the Federal Republic of Germany," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 36(4), pages 319-33, December.
  15. Slesnick, Daniel T., 2002. "Prices and Regional Variation in Welfare," Journal of Urban Economics, Elsevier, vol. 51(3), pages 446-468, May.
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