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Productivity, Structural Change in Employment and Economic Growth

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  • Enrique R. Casares

    (Universidad Autónoma Metropolitana)

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    Abstract

    We develop an endogenous growth model with two sectors, manufacturing and non-manufacturing. The manufacturing sector is the source of the balanced productivity growth. We study how the economy responds to shifts in sector-specific productivity. Thus, when the sector-specific productivity in the manufacturing sector increases, we find that the fraction of labor employed in the manufacturing sector follows an inverted V curve, and that the growth rate increases. Thus, the model captures approximately the documented pattern of development for the share of manufacturing employment, a bell shape over time. When the sector-specific productivity in the non-manufacturing sector increases, the growth rate remains unchanged because the non-manufacturing sector is the non-learning sector.

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    File URL: http://codex.colmex.mx:8991/exlibris/aleph/a18_1/apache_media/5V3NPV92IBJ7Q8K86T6S8S62FRTYV9.pdf
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    Bibliographic Info

    Article provided by El Colegio de México, Centro de Estudios Económicos in its journal Estudios Económicos.

    Volume (Year): 22 (2007)
    Issue (Month): 2 ()
    Pages: 335-355

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    Handle: RePEc:emx:esteco:v:22:y:2007:i:2:p:335-355

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    Web page: http://www.colmex.mx/centros/cee/
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    Related research

    Keywords: manufacturing sector; learning by doing; productivity; structural change; growth;

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    1. Vladimir Klyuev, 2004. "Evolution of the Relative Price of Goods and Services in a Neoclassical Model of Capital Accumulation," IMF Working Papers 04/207, International Monetary Fund.
    2. Kiminori Matsuyama, 1990. "Agricultural Productivity, Comparative Advantage, and Economic Growth," Discussion Papers 934, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    3. Paul Bergin & Reuven Glick & Alan M. Taylor, 2004. "Productivity, tradability, and the long-run price puzzle," Working Paper Series 2004-08, Federal Reserve Bank of San Francisco.
    4. L. Rachel Ngai & Christopher A. Pissarides, 2007. "Structural Change in a Multisector Model of Growth," American Economic Review, American Economic Association, vol. 97(1), pages 429-443, March.
    5. Daron Acemoglu & Veronica Guerrieri, 2006. "Capital Deepening and Non-Balanced Economic Growth," 2006 Meeting Papers 207, Society for Economic Dynamics.
    6. Sergio Rebelo & Piyabha Kongsamut & Danyang Xie, 2001. "Beyond Balanced Growth," IMF Working Papers 01/85, International Monetary Fund.
    7. Baumol, William J, 1972. "Macroeconomics of Unbalanced Growth: Reply," American Economic Review, American Economic Association, vol. 62(1), pages 150, March.
    8. 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.
    9. Kuznets, Simon, 1973. "Modern Economic Growth: Findings and Reflections," American Economic Review, American Economic Association, vol. 63(3), pages 247-58, June.
    10. Oulton, Nicholas, 2001. "Must the Growth Rate Decline? Baumol's Unbalanced Growth Revisited," Oxford Economic Papers, Oxford University Press, vol. 53(4), pages 605-27, October.
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