Florian Trouvain

I explore the role of land as a fixed factor of production in shaping consumption volatility and consumption inequality in the presence of idiosyncratic uninsurable labor income risk. Land as an asset in fixed supply offers a particularly effective form of self-insurance through its effect on the share of safe to risky household income in general equilibrium. I use the theory to explain consumption dynamics in land-intensive rural economies. The model helps explain the puzzlingly low passthrough from income shocks to consumption as well as low intergenerational mobility found for rural households in developing economies.

I develop a tractable semi-endogenous multi-country growth model with a technology adoption margin. Innovation and adoption are skill-intensive activities, and a tradeoff arises whether skilled labor is used to push out the technological frontier or to adopt existing technology. I use the theory to revisit the effect of market integration on growth, especially among asymmetric countries with large differences in innovative capacity. Transitional dynamics and long-run effects implied by the model differ substantially from benchmark endogenous growth models and jointly explain stellar per capita growth in emerging markets and the disappointing growth performance of advanced economies after rising global market integration since the 1990s.

I argue that rapid rural-to-urban structural change—and the inherent risk asso- ciated with households moving from traditional farming into urban economic activ- ity—are central drivers of precautionary savings, generating capital outflows along the development path. I develop a tractable model that explores this argument. The key ingredients of the model are structural transformation away from agricultural pro- duction and households’ uncertain, heterogeneous income-growth experience as they enter the urban sector. The model provides new insights into the link between con- sumption smoothing, precautionary savings, and the uneven distribution of catch-up growth across households. Consistent with the theory, I present evidence from China that highlights stark differences in savings behavior across rural and urban households.

I develop a theory of ``miracle'' convergence growth that rationalizes three salient facts. First, growth miracles are often associated with net capital outflows, driven by demand for safe assets. Second, net FDI inflows occur along the transition path. Third, inequality is rising dramatically. I develop an incomplete market model with growth rate heterogeneity so that convergence growth itself is unevenly distributed. In combination with financial frictions, the model generates strong household savings pressure, and net capital outflows alongside FDI inflows. The theory highlights that the distribution of growth in emerging markets matters for global capital flows.

I measure urban-rural differences in human capital risk to understand differences in wealth accumulation and savings behavior across urban and rural households in poor and middle-income countries. I explore how risk interacts with human capital accumulation and structural change from rural to urban economic activity. In a final step I assess whether public safety nets can be effective tools to accelerate the process of urbanization through the lens of a two-sector incomplete market model of long-run structural change.