This paper proposes a small-scale general equilibrium model of structural transformation with an urban labour market characterized by search frictions. The model is used to investigate the role of sectoral TFPs as main drivers of structural change and a new growth accounting exercise gives a...

This paper argues that dual economy models deserve a central place in the analysis of growth in developing countries. The paper shows how these models can be used to analyze the output losses associated with factor mis-allocation, aggregate growth in the presence of factor market distortions,...

In middle-income countries, the informal sector often accounts for a substantial fraction of urban employment. We develop a general equilibrium model with matching frictions in the urban labour market, the possibility of self-employment in the informal sector, and scope for rural-urban...