Wage and Fertility Gaps in Dual Economies

  • Sibabrata Das
  • Alex Mourmouras
  • Peter C. RangazasEmail author
Part of the Springer Texts in Business and Economics book series (STBE)


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, the wage gap suggests that 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.


Human Capital Marginal Product Family Production Child Labor Family Farm 
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Copyright information

© Springer International Publishing Switzerland 2015

Authors and Affiliations

  • Sibabrata Das
    • 1
  • Alex Mourmouras
    • 2
  • Peter C. Rangazas
    • 3
    Email author
  1. 1.International Monetary FundWashingtonUSA
  2. 2.Asia and Pacific DepartmentInternational Monetary FundWashingtonUSA
  3. 3.Indiana University-Purdue University Indianapolis (IUPUI)IndianapolisUSA

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