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The Dual Economy in Long-run Development

  • Vollrath, Dietrich

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 demonstrates 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 inefficiencies of a dual economy and slow down long-run growth.

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File URL: https://mpra.ub.uni-muenchen.de/12293/1/MPRA_paper_12293.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 12293.

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Date of creation: 18 Dec 2008
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Handle: RePEc:pra:mprapa:12293
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  42. John Laitner, 2000. "Structural Change and Economic Growth," Review of Economic Studies, Oxford University Press, vol. 67(3), pages 545-561.
  43. Proto, Eugenio, 2007. "Land and the transition from a dual to a modern economy," Journal of Development Economics, Elsevier, vol. 83(1), pages 88-108, May.
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