Work and Income Sharing in a Rural Economy: Effect on Economic Growth and Welfare

Authors: Nobuyuki Iwai, Stanley R. Thompson. Published in Theoretical Economics Letters, 2014, Volume 4, pp 386-396.

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.

Publication type: 
Journal article
Date published: 
Tuesday, April 1, 2014