This paper analyses the correlation between employment duration, unemployment duration and general skill accumulation in a search equilibrium. I show how the level of general skills and the duration of employment are positively correlated, and both variables are negatively correlated with the...

In developing countries, the gradual transition to modern growth seems puzzling given the large productivity growth gap between traditional and modern sectors. We document this transition and develop a theory that resolves this puzzle. The key forces are sector-specific complementarity between...

In developing countries, income per capita typically remains stagnant for long periods before taking-off. We study this as the outcome of a gradual transition of the workforce from traditional to modern sectors. While exogenous productivity growth is present in the modern sector only, transition...