Unbalanced growth: a case of structural dynamics

Abstract

This paper argues that Baumol’s model of unbalanced growth can be thought of as a particular case of Pasinetti’s pure labour model. Reformulating the model and making more explicit its similarities with Pasinetti, we expand the hypotheses that underlie the model to include the demand side. We aim to show that by this extension, the model leads to new conclusions on the roles played by effective demand and technical progress in determining the dynamics of the labour force and output.