Desmet, Klaus; Ortín, Ignacio Ortuño - In: Scandinavian Journal of Economics 109 (2007) 1, pp. 1-24
We propose a two-region two-sector model of uneven development, where technological change benefits either the lagging or the leading region. In this framework interregional transfers may lead to persistent underdevelopment; by raising wages, transfers reduce the chance of the backward region...