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Title:Dualism and the big push PDF Logo
Authors:Valensisi, Giovanni
Issue Date:2008
Series/Report no.:Proceedings of the German Development Economics Conference, Zürich 2008 45
Abstract:We develop a two-sector model with specific factors, in which agriculture is subject to diminishing returns and market-clearing wages, while increasing returns and efficiency wages prevail in industry. The asymmetric interaction of the two sectors, jointly with the dualistic structure of the labor market, is such that the model may display multiple equilibra and a low-development trap under plausible parametrization. Additionally, parametric increases of sectoral TFP may reduce the basin of attraction of the low-equilibrium and increase the steady state level of capital stock (and wages) for the stable equilibrium of full industrialization.
Subjects:dualism
industrialization
poverty traps
Kaldor-Verdoorn law
Engel's effects
JEL:O11
O14
O41
Document Type:Conference Paper
Appears in Collections:Proceedings of the German Development Economics Conference, 2008 (Zürich)

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