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Intersectoral size differences and migration: Kuznets revisited

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  • Anbarci, Nejat
  • Ulubasoglu, Mehmet A.

Abstract

That researchers look for the inverted-U shape in inequality in the arbitrary periods of arbitrary countries underlies the divergent empirical evidence across studies. To point to the right context for the pattern, this paper establishes a formal mechanism in line with Kuznets' explanation that relates to the industrialization-cum-urbanization phases of closed trade regimes. The mechanism involves an interaction among urban-rural sectoral size differences, agricultural tastes/income, and migration, and predicts an inverted-U shape in inequality in the following way: (i) widening differences in the sizes of urban and rural sectors due to exogenous shocks affect negatively the agricultural tastes/income, worsening inequality; (ii) increasing sectoral size differences and decreasing agricultural tastes/income jointly foster intersectoral migration; (iii) migration acts, in turn, as an equilibrating effect, improving the income distribution. Empirically testing these predictions, non-Sub-Saharan developing countries' data support the mechanism, while data from developed and Sub-Saharan African countries provide little support, as per our prior expectations. This highlights a contrasting evidence on the inverted-U shape across country groups of differing development stages.
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Suggested Citation

  • Anbarci, Nejat & Ulubasoglu, Mehmet A., 2005. "Intersectoral size differences and migration: Kuznets revisited," Working Papers eco_2005_16, Deakin University, Department of Economics.
  • Handle: RePEc:dkn:econwp:eco_2005_16
    DOI: 10.1080/09638199.2011.538232
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    References listed on IDEAS

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    1. Romain Wacziarg & Karen Horn Welch, 2008. "Trade Liberalization and Growth: New Evidence," The World Bank Economic Review, World Bank, vol. 22(2), pages 187-231, June.
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    More about this item

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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