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Wage and Fertility Gaps in Dual Economies

In: Economic Growth and Development

Author

Listed:
  • Sibabrata Das

    (International Monetary Fund)

  • Alex Mourmouras

    (International Monetary Fund)

  • Peter Rangazas

    (Indiana University-Purdue University)

Abstract

This chapter begins our analysis of two sector models where markets may be missing. Here we focus on the fact that wages are lower and fertility is higher in the traditional sector than in the modern sector of economies. This has important consequences for economic growth for two reasons. First, as suggested by growth fact G11, the wage gap indicates the allocation of labor may be inefficient—the movement of labor from the traditional sector to the modern sector should raise average labor productivity. Second, if fertility falls as households move from the traditional sector to the modern sector, then population growth will decline making it easier to increase physical capital per worker.

Suggested Citation

  • Sibabrata Das & Alex Mourmouras & Peter Rangazas, 2018. "Wage and Fertility Gaps in Dual Economies," Springer Texts in Business and Economics, in: Economic Growth and Development, edition 2, chapter 7, pages 191-227, Springer.
  • Handle: RePEc:spr:sptchp:978-3-319-89755-4_7
    DOI: 10.1007/978-3-319-89755-4_7
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    3. Roi D. Taussig, 2017. "Stickiness of employee expenses and implications for stock returns," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 7(2), pages 297-309, August.

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    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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