Dualism, unemployment and growth

Author(s): Borda, Patrice; Gavrel, Frederic (2000)

Created 22 Jul, 2000
Categories Working Papers
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Using a dual representation of the economy, we develop a model that attempts to explain economic take-off. The model takes into account two kinds of externalities that spread from the modern sector into the traditional one. On the one hand, a static externality (Marshall type economy scale) and on the other hand, a dynamic technology externality. We show that the economy can be characterised by two configurations: and underdevelopment equilibrium and a biased-development equilibrium with a higher level of unemployment. If the development of the modern sector decreases employment, then the take-off is accomplished by an increase in unemployment.

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