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REASSESSING THE IMPACT OF BARRIERS TO CAPITAL ACCUMULATION ON INTERNATIONAL INCOME DIFFERENCES *
Author(s) -
LandonLane John S.,
Robertson Peter E.
Publication year - 2007
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/j.1468-2354.2007.00420.x
Subject(s) - stylized fact , economics , per capita income , labour economics , capital (architecture) , capital accumulation , per capita , human capital , monetary economics , demographic economics , macroeconomics , economic growth , history , population , demography , archaeology , sociology
Can barriers to capital accumulation account for large differences in GDP per capita? We reconsider the claim that these barriers have an amplified effect on income levels in a model where both modern and traditional sector technologies are active. We show that this claim is not correct. We do find, however, that the removal of barriers to capital accumulation can cause large changes in the employment shares of labor. Thus the model can account for an important stylized fact of the development process, with labor moving from the traditional to the modern sector as income levels rise.