Reassessing the Impact of Barriers to Capital Accumulation on International Income Differences

7 Pages Posted: 8 Feb 2007

See all articles by John Landon-Lane

John Landon-Lane

Rutgers University, New Brunswick/Piscataway - Faculty of Arts and Sciences-New Brunswick/Piscataway - Department of Economics

Peter E. Robertson

The University of Western Australia

Abstract

Can barriers to capital accumulation account for large differences in GDP per capita? We reconsider the claim that these barriers have an amplified effect on income levels in a model where both modern and traditional sector technologies are active. We show that this claim is not correct. We do find, however, that the removal of barriers to capital accumulation can cause large changes in the employment shares of labor. Thus the model can account for an important stylized fact of the development process, with labor moving from the traditional to the modern sector as income levels rise.

Suggested Citation

Landon-Lane, John and Robertson, Peter E., Reassessing the Impact of Barriers to Capital Accumulation on International Income Differences. International Economic Review, Vol. 48, No. 1, pp. 147-154, February 2007, Available at SSRN: https://ssrn.com/abstract=961913 or http://dx.doi.org/10.1111/j.1468-2354.2007.00420.x

John Landon-Lane

Rutgers University, New Brunswick/Piscataway - Faculty of Arts and Sciences-New Brunswick/Piscataway - Department of Economics ( email )

75 Hamilton Street
New Brunswick, NJ 08901
United States

Peter E. Robertson (Contact Author)

The University of Western Australia ( email )

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