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Structural change and inter-sectoral mobility in a two-sector economy

Angelo Antoci, Marcello Galeotti, Gianluca Iannucci () and Paolo Russu

Chaos, Solitons & Fractals, 2015, vol. 79, issue C, 18-29

Abstract: This paper studies the dynamics of a two-sector economy (with a natural resource-dependent sector and an industrial sector) characterized by free inter-sectoral labor mobility and heterogeneity of agents (workers and entrepreneurs). In such a context, we analyze the effects of the deterioration of natural resources, caused by the production activity of both sectors, on inter-sectoral movements of the labor force (structural changes), on ecological dynamics and on the revenues of workers and entrepreneurs. As in the seminal work by Matsuyama (1992), we obtain that a low productivity of labor in the resource-dependent sector can fuel the industrialization process. However, differently from Matsuyama, in our model the industrialization process may give rise to a reduction in workers’ revenues if the contribution to environmental depletion of the industrial sector, per unit of product, is higher than that of the resource-dependent one.

Keywords: Structural change; Environmental externalities; Two-sector growth model (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1016/j.chaos.2015.05.015

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