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Growth and development with dual labor markets
Journal article   Peer reviewed

Growth and development with dual labor markets

Anne Villamil, Xiaobing Wang and Yuxiang Zou
The Manchester school, Vol.88(6), pp.801-826
12/2020
DOI: 10.1111/manc.12341

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Abstract

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.
dual economy economic growth open economy structural change surplus labour

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