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Growth and development with dual labor markets
Author(s) -
Villamil Anne,
Wang Xiaobing,
Zou Yuxiang
Publication year - 2020
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/manc.12341
Subject(s) - economics , dual (grammatical number) , dual economy , labour economics , growth model , wage , capital (architecture) , wage growth , capital accumulation , developing country , human capital , market economy , macroeconomics , economic growth , art , history , literature , archaeology
This paper develops a formal growth model in an open economy environment that captures dual labour market characteristics. The mechanism involves economic growth driven by capital accumulation in a country with a Lewisian labour market leading to increasing labour participation at a near constant wage. The model shows that surplus labour plays a critical role in explaining different economic growth paths and structural changes in both developing and developed countries.