Abstract
A defining feature of many poor economies is the large fraction of workers engaged in subsistence agriculture. We develop a multi-sector multi-region model of a poor economy in which it is costly to transport goods across regions in order to study this outcome. A key finding is that higher transport costs drive up the size of the agricultural workforce and the fraction in subsistence. In a calibrated version of our model we show that the effect of transport productivity is quantitatively important in terms of both allocations and welfare.
Original language | English (US) |
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Pages (from-to) | 38-48 |
Number of pages | 11 |
Journal | Journal of Development Economics |
Volume | 107 |
DOIs | |
State | Published - Mar 2014 |
All Science Journal Classification (ASJC) codes
- Development
- Economics and Econometrics
Keywords
- Agricultural development
- Economic development
- Structural transformation
- Subsistence agriculture
- Transport costs
- Two-sector model