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Abstract

In the post-WWII era, most developing economies had decent economic growth, but,with current growth trends, the great majority of them are unlikely to transform intodeveloped economies in near future. In these economies, the dual economic structure, thecoexistence of the modern-formal sector and the traditional-informal sector, is persistent.The educational level of the population increased greatly, but the growth of the skill level,especially when measured by the share of high-skill workers, is relatively modest. Wageinequality between workers with basic skills and with advanced skills rose over time, whilethe inequality between workers with and without basic skills fell greatly.

In order to understand these facts, this paper develops a dynamic dual-economy modeland examines how the long-run outcome of the economy depends on the initial distributionof wealth and sectoral productivity. It is shown that, for fast transformation intoa developed economy, the initial distribution must be such that extreme poverty is notprevalent and the size of -middle class- is enough. If the former is satisfied but the latteris not, which would be the case for many developing economies falling into -middle incometrap-, the fraction of workers with basic skills and the share of the modern sector rise,but inequality between workers with advanced skills and with basic skills worsens and thetraditional sector remains, consistent with the above-mentioned facts.



Item Type: MPRA Paper -

Original Title: Education, inequality, and development in a dual economy-

Language: English-

Keywords: dual economy, modernization, education, wealth distribution-

Subjects: J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure ; Wage DifferentialsO - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O17 - Formal and Informal Sectors ; Shadow Economy ; Institutional ArrangementsO - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O15 - Human Resources ; Human Development ; Income Distribution ; Migration-





Autor: Yuki, Kazuhiro

Fuente: https://mpra.ub.uni-muenchen.de/39062/







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