Barriers to Accumulation and Productivity Differences in a Two Sector Growth Model

John Landon-Lane () and Peter Robertson

Departmental Working Papers from Rutgers University, Department of Economics

Abstract: Barriers to investment are often regarded as an important determinant of the variation in international income levels. Nevertheless, in the standard neoclassical growth model, these barriers have only have small effects on per capita incomes. We consider the effects of barriers to accumulation in a two-sector neoclassical model that also exhibits barriers to labor mobility. Numerical simulation show that barriers to accumulation have a magnified effect in this model. The results imply that if labor markets are not efficient, then barriers to accumulation may be an important determinant of a country's income level. Moreover, we show that the removal of these barriers can produce several decades of rapid growth, reminiscent of economic growth miracles.

Keywords: Barriers; Development; Dual economies; Growth; Wage gaps (search for similar items in EconPapers)
JEL-codes: O0 O4 O41 (search for similar items in EconPapers)
Date: 2005-11-10
New Economics Papers: this item is included in nep-dev
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:rut:rutres:200510

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