Specialization , Economic Development and Aggregate Productivity Differences

  title={Specialization , Economic Development and Aggregate Productivity Differences},
  author={David Lagakos},
  • David Lagakos
  • Published 2009
——————————————————————————————————— Cross-country labor productivity differences are large in agriculture and much smaller in nonagriculture. We argue that these relative productivity differences arise when subsistence consumption needs prevent workers in poor countries from specializing in the sector in which they are most productive. We formalize our theory by embedding the Roy (1951) model of selection into a two-sector general-equilibrium growth model in which the agents’ preferences… CONTINUE READING


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