Life During Structural Transformation

Jonathan Temple and Huikang Ying

No 10297, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We examine whether structural transformation leads to a Kuznets curve. We present a dynamic general equilibrium model with heterogeneous workers, occupational self-selection and selective migration, and calibrate the model to survey data for Malawi. We show that structural transformation raises living standards unevenly. As development proceeds, the movement of workers from agriculture is associated with rising wage inequality, rather than a Kuznets curve. The increase in sectoral wage inequality is pronounced for agriculture. At the same time, structural transformation is associated with major reductions in rural poverty, and eventually in urban poverty.

Keywords: Inequality; Kuznets curve; Roy model; Structural transformation (search for similar items in EconPapers)
JEL-codes: D31 O15 O41 (search for similar items in EconPapers)
Date: 2014-12
New Economics Papers: this item is included in nep-dge
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Citations: View citations in EconPapers (4)

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