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How significant is the role of reallocation to long-term growth?

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  • Shu-Shiuan Lu

Abstract

This article investigates the contribution of labour and capital reallocation from the farm to the nonfarm sector to Total Factor Productivity (TFP) Growth (TFPG). We find that if labour reallocation is hypothetically suppressed in economies experiencing rapid structural transformation, that is, South Korea and Taiwan, the annualized long-term TFPG rate can be reduced by more than 0.8 percentage points. Such an effect is significant.

Suggested Citation

  • Shu-Shiuan Lu, 2012. "How significant is the role of reallocation to long-term growth?," Applied Economics Letters, Taylor & Francis Journals, vol. 19(7), pages 695-698, May.
    • Handle: RePEc:taf:apeclt:v:19:y:2012:i:7:p:695-698
    DOI: 10.1080/13504851.2011.595675
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