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Dualism and the big push

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  • Valensisi, Giovanni

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.

Suggested Citation

  • Valensisi, Giovanni, 2008. "Dualism and the big push," Proceedings of the German Development Economics Conference, Zurich 2008 45, Verein für Socialpolitik, Research Committee Development Economics.
    • Handle: RePEc:zbw:gdec08:45
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    References listed on IDEAS

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    1. Ben-David, Dan, 1998. "Convergence clubs and subsistence economies," Journal of Development Economics, Elsevier, vol. 55(1), pages 155-171, February.
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    Cited by:

    1. Valensisi, Giovanni & Gauci, Adrian, 2013. "Graduated without passing? The employment dimension and LDCs' prospects under the Istanbul Programme of Action," MPRA Paper 86966, University Library of Munich, Germany.

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    More about this item

    Keywords

    dualism; industrialization; poverty traps; Kaldor-Verdoorn law; Engel's effects;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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