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The Dual Economy in Long-run Development

  • Dietz Vollrath

    ()

    (Department of Economics, University of Houston)

This paper provides a dynamic model of the dual economy in which differences in productivity across sectors arise endogenously. Rather than relying on exogenous price distortions, duality arises because of differences between sectors in the separability of their fertility and labor decisions. The model demon- strates how a dual economy will originate, persist, and eventually disappear within a unified growth framework. It is also shown that agricultural productivity growth will exacerbate the ine±ciencies of a dual economy and slow down long-run growth.

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File URL: http://www.uh.edu/econpapers/RePEc/hou/wpaper/2008-03.pdf
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Paper provided by Department of Economics, University of Houston in its series Working Papers with number 2008-03.

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Length: 28 pages
Date of creation: Nov 2008
Date of revision:
Handle: RePEc:hou:wpaper:2008-03
Contact details of provider: Postal: Houston TX 77023
Web page: http://www.uh.edu/class/economics/

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