Dualism and Aggregate Productivity

42 Pages Posted: 11 Jun 2004

See all articles by Jonathan R.W. Temple

Jonathan R.W. Temple

Centre for Economic Policy Research (CEPR)

Date Written: May 2004


This Paper shows how to calibrate a two-sector general equilibrium model of production using a small number of parameter assumptions and readily available data. The framework is then used to analyse the costs of labour market dualism. The Paper quantifies the effects of rural-urban wage differentials and urban unemployment on aggregate productivity, wages and returns to capital, factor shares, and sectoral structure. One of the main findings is that labour market rigidities can have a major impact on the extent of industrialization.

Keywords: Dualism, productivity, wage differentials, minimum wages

JEL Classification: D61, O40

Suggested Citation

Temple, Jonathan R.W., Dualism and Aggregate Productivity (May 2004). CEPR Discussion Paper No. 4387. Available at SSRN: https://ssrn.com/abstract=556131

Jonathan R.W. Temple (Contact Author)

Centre for Economic Policy Research (CEPR)

United Kingdom

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