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A Simple Theory of Structural Transformation

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Abstract

The paper presents a theory of the industrial transformation amongst sectors using endogenous growth theory. Allowing only a slight upward trend in the productivity of the human capital sector, combined with ascending degrees of human capital shares of sectoral output, in say, agriculture, manufacturing and services, output gradually shifts relatively over time from agriculture to manufacturing and to services. Abstracting from international trade theory, sectors intensive in the factor that is becoming relatively more plentiful find their relative outputs expanding. Adding more sectors of greater human capital intensity causes labor time to decrease within each sector, as shown for agriculture, and in general for any number of sectors.

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  • Gillman, Max, 2011. "A Simple Theory of Structural Transformation," Cardiff Economics Working Papers E2011/4, Cardiff University, Cardiff Business School, Economics Section, revised May 2011.
    • Handle: RePEc:cdf:wpaper:2011/4
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    7. Gary S. Becker, 1975. "Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education, Second Edition," NBER Books, National Bureau of Economic Research, Inc, number beck75-1, May.
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    Cited by:

    1. Haroon Bhorat & Francois Steenkamp & Christopher Rooney, "undated". "Africa’s Manufacturing Malaise," UNDP Africa Policy Notes 2016-03, United Nations Development Programme, Regional Bureau for Africa.
    2. María José Ibarrola-Rivas & Thomas Kastner & Sanderine Nonhebel, 2016. "How Much Time Does a Farmer Spend to Produce My food? An International Comparison of the Impact of Diets and Mechanization," Resources, MDPI, vol. 5(4), pages 1-13, December.

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    More about this item

    Keywords

    Human Capital Intensity; Sectoral Allocation; Labor Shares; Secular Endogenous Growth;
    All these keywords.

    JEL classification:

    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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