Published papers

This paper investigates how poverty reduction and natural resource preservation can be simultaneously achieved in a small open dual economy with urban wage rigidity, open access rural resources, and rural-urban migration. An increase in the export tax rate on the rural resource good increases urban unemployment in both the short run and the long run with resource dynamics. Given the institutional failures, the first-best policy is an urban wage subsidy combined with either a rural wage subsidy at a lower rate or, if the urban output price is sufficiently high, a rural tax. When the institutional failures can be resolved endogenously, an increase in the export tax on the resource good can induce rural institutional change away from open access. However, tariff protection of urban manufacturing hinders such a rural institutional change.

In low-income countries, labor productivity crucially depends on per capita consumption that contributes to good nutrition, health, and education. A higher level of per capita consumption improves each worker’s labor productivity. This concept of productive consumption was first formulated in the aggregate growth model by Steger (J Econ Dyn Control (2002) 26:1053–1068) and analyzed using numerical simulations. In this chapter, we investigate the stability of the labor-efficiency model of productive consumption by extending Steger’s model to a two-sector model. We find that a steady state uniquely exists and is saddle-point stable, providing theoretical support for Steger’s simulation results.

It has been found that population decline may change the properties of growth paths from those in a population-increasing economy in the Solow and semi-endogenous growth models. However, the rates of population decline for such dynamics seem too large given the available empirical data. We show that positive capital-input externalities can reduce such rates of population decline to empirically relevant levels in a semi-endogenous growth model, while the introduction of child rearing costs could play a similar role in the Solow model. The economic implications of child rearing costs are discussed for the Solow growth model with population decline.