Advanced Search
MyIDEAS: Login to save this article or follow this journal

Engel versus Baumol: Accounting for structural change using two centuries of U.S. data

Contents:

Author Info

  • Dennis, Benjamin N.
  • Iscan, Talan B.

Abstract

In the last two centuries, the reallocation of labor out of agriculture has been a dominant feature of structural change and economic growth in the United States. This paper uses an accounting framework founded in economic theory to decompose this reallocation into three components: a demand-side effect due to the low income elasticity of demand for agricultural goods (Engel effect), and two supply-side effects, one due to differential sectoral productivity growth rates (Baumol effect), and the other to differential capital deepening. The results show that the Engel effect accounts for almost all labor reallocation until the 1950s, after which the Baumol effect becomes a key determinant. Our framework provides a unified account of long-run structural change, and demonstrates that historical interpretations and theoretical models that emphasize only one dimension of this process cannot properly account for the dramatic history of labor reallocation in the United States.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.sciencedirect.com/science/article/B6WFJ-4V4KPXN-1/2/d92c0c6937449a19de62ecae950697d0
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by Elsevier in its journal Explorations in Economic History.

Volume (Year): 46 (2009)
Issue (Month): 2 (April)
Pages: 186-202

as in new window
Handle: RePEc:eee:exehis:v:46:y:2009:i:2:p:186-202

Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/622830

Related research

Keywords: Long-run structural change Engel's law Differential sectoral productivity growth Differential sectoral capital deepening;

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Kongsamut, P. & Rebelo, S. & Xie, D., 1997. "Beyong Balanced Growth," RCER Working Papers 438, University of Rochester - Center for Economic Research (RCER).
  2. Victor R. Fuchs, 1968. "The Service Economy," NBER Books, National Bureau of Economic Research, Inc, number fuch68-1, July.
  3. Benjamin N. Dennis & Talan Iscan, 2007. "Accounting for Structural Change: Evidence from Two Centuries of U.S. Data," Department of Economics at Dalhousie University working papers archive account7, Dalhousie, Department of Economics.
  4. L. Rachel Ngai & Christopher Pissarides, 2005. "Structural change in a multi-sector model of growth," LSE Research Online Documents on Economics 4656, London School of Economics and Political Science, LSE Library.
  5. Gordon,Robert J., 2004. "Productivity Growth, Inflation, and Unemployment," Cambridge Books, Cambridge University Press, number 9780521531429, April.
  6. Gordon,Robert J., 2004. "Productivity Growth, Inflation, and Unemployment," Cambridge Books, Cambridge University Press, number 9780521800082, April.
  7. Francesco Caselli & Wilbur John Coleman II, 2001. "The U.S. Structural Transformation and Regional Convergence: A Reinterpretation," Journal of Political Economy, University of Chicago Press, vol. 109(3), pages 584-616, June.
  8. Marvin Towne & Wayne Rasmussen, 1960. "Farm Gross Product and Gross Investment in the Nineteenth Century," NBER Chapters, in: Trends in the American Economy in the Nineteenth Century, pages 255-316 National Bureau of Economic Research, Inc.
  9. Daron Acemoglu & Veronica Guerrieri, 2008. "Capital Deepening and Nonbalanced Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 116(3), pages 467-498, 06.
  10. John W. Kendrick, 1961. "Productivity Trends in the United States," NBER Books, National Bureau of Economic Research, Inc, number kend61-1, July.
  11. Perez, Stephen J & Siegler, Mark V, 2003. " Inflationary Expectations and the Fisher Effect prior to World War I," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 35(6), pages 947-65, December.
  12. Echevarria, Cristina, 1997. "Changes in Sectoral Composition Associated with Economic Growth," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(2), pages 431-52, May.
  13. Dennis, Benjamin N. & Iscan, Talan B., 2007. "Productivity growth and agricultural out-migration in the United States," Structural Change and Economic Dynamics, Elsevier, vol. 18(1), pages 52-74, March.
  14. Kenneth L. Sokoloff, 1986. "Productivity Growth in Manufacturing during Early Industrialization: Evidence from the American Northeast, 1820-1860," NBER Chapters, in: Long-Term Factors in American Economic Growth, pages 679-736 National Bureau of Economic Research, Inc.
  15. Young, Andrew T., 2010. "One of the things we know that ain't so: Is US labor's share relatively stable?," Journal of Macroeconomics, Elsevier, vol. 32(1), pages 90-102, March.
  16. Robert E. Gallman, 1986. "The United States Capital Stock in the Nineteenth Century," NBER Chapters, in: Long-Term Factors in American Economic Growth, pages 165-214 National Bureau of Economic Research, Inc.
  17. Robert E. Gallman & Thomas J. Weiss, 1969. "The Service Industries in the Nineteenth Century," NBER Chapters, in: Production and Productivity in the Service Industries, pages 287-381 National Bureau of Economic Research, Inc.
  18. D. Gale Johnson, 2002. "Comment on "The U.S. Structural Transformation and Regional Convergence: A Reinterpretation"," Journal of Political Economy, University of Chicago Press, vol. 110(6), pages 1414-1418, December.
  19. Jeremy Atack & Fred Bateman & Robert A. Margo, 2005. "Capital deepening and the rise of the factory: the American experience during the nineteenth century -super-1 ," Economic History Review, Economic History Society, vol. 58(3), pages 586-595, 08.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Minghong Tan, 2014. "The Transition of Farmland Production Functions in Metropolitan Areas in China," Sustainability, MDPI, Open Access Journal, vol. 6(7), pages 4028-4041, June.
  2. Herrendorf, Berthold & Rogerson, Richard & Valentinyi, Akos, 2013. "Growth and Structural Transformation," CEPR Discussion Papers 9370, C.E.P.R. Discussion Papers.
  3. Francisco Alvarez-Cuadrado & Ngo Van Long, 2011. "Capital-Labor Substitution, Structural Change and Growth," Cahiers de recherche 12-2011, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
  4. Pina, Gilson M. G., 2013. "Mudança estrutural e a relação entre os setores em Cabo Verde
    [Structural change and the sectoral linkage in Cape Verde]
    ," MPRA Paper 46015, University Library of Munich, Germany.
  5. Dietrich, Andreas & Krüger, Jens, 2010. "Numerical Explorations of the Ngai-Pissarides Model of Growth and Structural Change," Darmstadt Discussion Papers in Economics 46865, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute of Economics (VWL).
  6. Murat Ungor, 2011. "De-industrialization of the Riches and the Rise of China," 2011 Meeting Papers 740, Society for Economic Dynamics.
  7. Jaime Alonso-Carrera & Xavier Raurich, 2014. "Demand-based structural change and balanced economic growth," UB Economics Working Papers 2014/303, Universitat de Barcelona, Facultat d'Economia i Empresa, UB Economics.
  8. Üngör, Murat, 2013. "De-agriculturalization as a result of productivity growth in agriculture," Economics Letters, Elsevier, vol. 119(2), pages 141-145.
  9. Aue, Alexander & Horváth, Lajos & Hušková, Marie, 2012. "Segmenting mean-nonstationary time series via trending regressions," Journal of Econometrics, Elsevier, vol. 168(2), pages 367-381.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:eee:exehis:v:46:y:2009:i:2:p:186-202. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.