Abstract
Abstract:The process of structural transformation from the farm to a nonfarm sector is accompanied by technological change in both sectors and massive population growth. We investigate the effects of increasing population size (the population effect) and sector-specific productivity (the push and pull effects), both factor-neutral and factor-biased, in a parsimonious general equilibrium model under general forms of utility and production functions. All three effects may co-exist and interact in important ways. Generalizing the agricultural sector production function to CES is crucial for the population growth effect. Our analysis highlights how the relative importance of the three effects changes as the country develops and production and consumption conditions become more flexible.
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