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Title:Barriers to accumulation and productivity differences in a two sector growth model PDF Logo
Authors:Landon-Lane, John S.
Robertson, Peter E.
Issue Date:2005
Series/Report no.:Working papers // Department of Economics, Rutgers, the State University of New Jersey 2005,10
Abstract:Barriers to investment are often regarded as an important determinant of the variation in international income levels. Nevertheless, in the standard neoclassical growth model, these barriers have only have small effects on per capita incomes. We consider the effects of barriers to accumulation in a two-sector neoclassical model that also exhibits barriers to labor mobility. Numerical simulation show that barriers to accumulation have a magnified effect in this model. The results imply that if labor markets are not efficient, then barriers to accumulation may be an important determinant of a country's income level. Moreover, we show that the removal of these barriers can produce several decades of rapid growth, reminiscent of economic growth miracles.
Subjects:Economic Growth
Economic Development
Dual Economy
Fragmented Labor Markets
Total Factor Productivity
Document Type:Working Paper
Appears in Collections:Working Papers, Department of Economics, Rutgers University

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