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Work and Income Sharing in a Rural Economy: Effect on Economic Growth and Welfare
Food and Resource Economics Department, University of Florida, Gainesville, USA
Department of Agricultural, Environmental and Development Economics, Ohio State University, Columbus, USA
- 1 Food and Resource Economics Department, University of Florida, Gainesville, USA
- 2 Department of Agricultural, Environmental and Development Economics, Ohio State University, Columbus, USA
Theoretical Economics Letters·Volume 04 (2014)·Pages 386–396·Published 13 June 2014·DOI10.4236/tel.2014.46050
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Abstract
An endogenous growth model is developed to explore the effect of work and income sharing (WIS) on economic growth and welfare in a developing rural economy. The practice of WIS is a mechanism which converts incremental diversity of risk into volatility reduction and overall welfare gain. However, the effect on economic growth is sector specific. WIS in the intermediate goods sector has a pro-growth effect through higher investment returns while in the agricultural sector it has an anti-growth effect through lower precautionary savings. WIS also decreases the level of regional government subsidies needed to achieve the optimal growth rate.
KeywordsWork and Income SharingRural EconomyEndogenous Growth ModelWelfare in Developing CountriesTechnology Adaptation
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