Rural–urban interdependence, structural change, and development

Keigo Nishida

Economics Letters, 2016, vol. 142, issue C, 83-86

Abstract: This paper presents a model of development that explicitly incorporates the interaction between rural agriculture and urban non-agriculture explored by Murata (2002). The increase of capital stock leads to capital intensive agriculture and the reallocation of labor from agriculture to non-agriculture. People who migrate to urban areas create new intermediate goods and enhance non-agricultural productivity, which, in turn, causes capital accumulation and capital intensive agriculture. This mechanism causes a poverty trap, stagnation, and unbounded growth.

Keywords: Structural change; Labor migration; Poverty trap; Sustained growth (search for similar items in EconPapers)
JEL-codes: O11 O12 O41 R11 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:142:y:2016:i:c:p:83-86

DOI: 10.1016/j.econlet.2016.03.013

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