Abstract
In this chapter we combine the main features introduced in previous chapters into a complete dual economy model. The model includes physical and human capital, fertility, wage gaps, and technological change. We then examine the ability of the model to replicate key features of the economic growth observed in real-world economies.
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Notes
- 1.
Across today’s developing countries, high percentages of the poor operate small businesses: 50 % for urban poor and 25–98 % for rural poor (Banerjee and Duflo 2011, p. 135). La Porta and Schleifer (2014) estimate the informal sector accounts for 30–40 % of economic activity in poor countries and an even higher share of employment.
- 2.
In more realistic models of human capital accumulation the schooling takeoff can be generated in ways other than through compulsory schooling or child labor laws. See Chap. 3 for discussions of how schooling could be increased using subsidies, including tuition subsidies.
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Das, S., Mourmouras, A., Rangazas, P.C. (2015). A Complete Dual Economy. In: Economic Growth and Development. Springer Texts in Business and Economics. Springer, Cham. https://doi.org/10.1007/978-3-319-14265-4_7
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