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The authors document substantial within-country (cross-municipality) differences in incomes for a large number of countries in the Americas. A significant fraction of the within-country differences cannot be explained by observed human capital. They conjecture that the sources of within-country and between-country differences are related. As a first step towards a unified framework, they propose a simple model incorporating both differences in technological know-how across countries and differences in productive efficiency within countries. The dominant empirical approach for understanding differences in income per capita starts with the neoclassical (Solow) growth model.
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