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Growth and development with dual labor markets

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  • Anne Villamil
  • Xiaobing Wang
  • Yuxiang Zou

Abstract

This paper develops a formal growth model in an open economy environment that captures dual labour market characteristics. The mechanism involves economic growth driven by capital accumulation in a country with a Lewisian labour market leading to increasing labour participation at a near constant wage. The model shows that surplus labour plays a critical role in explaining different economic growth paths and structural changes in both developing and developed countries.

Suggested Citation

  • Anne Villamil & Xiaobing Wang & Yuxiang Zou, 2020. "Growth and development with dual labor markets," Manchester School, University of Manchester, vol. 88(6), pages 801-826, December.
    • Handle: RePEc:bla:manchs:v:88:y:2020:i:6:p:801-826
    DOI: 10.1111/manc.12341
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