Working paper

The Farmer, the Blue-collar, and the Monk: Understanding economic development through saturations of demands and non-homothetic productivity gains

Elie Gray, André Grimaud, and David Le Bris

Abstract

To explain the process of development historically documented, we consider a model with three economic sectors (agriculture, manufacturing and services) characterized by different productivity gains and by saturation levels in the demands of agricultural and manufactured goods. Our parsimonious model captures within a single framework the process of development which is characterized by the structural changes in the workforce across sectors, variable growth rates (an initial “Malthusian regime” exhibiting slow growth, a fast growth regime after a takeoff, and a gradual slow down leading to a possible new stagnation) and the relative evolutions of prices across sectors. Reasonable calibration generates results quantitatively close to the observed empirical facts.

Keywords

Growth model; Structural change; Unified growth; Economic development; Saturation of demands;

JEL codes

  • N1: Macroeconomics and Monetary Economics • Industrial Structure • Growth • Fluctuations
  • O1: Economic Development
  • O4: Economic Growth and Aggregate Productivity

Reference

Elie Gray, André Grimaud, and David Le Bris, The Farmer, the Blue-collar, and the Monk: Understanding economic development through saturations of demands and non-homothetic productivity gains, TSE Working Paper, n. 18-906, March 2018.

See also

Published in

TSE Working Paper, n. 18-906, March 2018