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

We introduce a new supply-push' instrument for foreign aid, to be used together with an instrumental variable estimator that filters out unobserved common factors. We use this instrument to study the effects of aid on macroeconomic ratios, and especially the ratios of consumption, investment,...

This paper develops empirical growth models suitable for dual economies, and studiesthe relationship between structural change and economic growth. Changes in the structureof employment will raise aggregate productivity when the marginal product of labourvaries across sectors. The models in the...

This paper develops empirical growth models suitable for dual economies, and studies the relationship between structural change and economic growth. Changes in the structure of employment will raise aggregate productivity when the marginal product of labour varies across sectors. The models in...