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The Decline of the U.S. Manufacturing: An Explanation from Structural Change

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  • Huang, Zongye

Abstract

In this paper, I develop a three-sector model that is able to fully explain the postwar structural transformation process experienced by the United States from 1950 to 2005. The model have multiple consumption goods which are produced using dierent factor intensities. The closed economy version of the model estimates the trends from 1950 to 1980 very well, but is not able to traces the labor movements since 1980s. An intuitive idea that would improves the performance of the model is to connect the soaring trade decits with the decline of manufacture sector since then. The modification to the model is simple: keeping the trade balance/GDP ratio as in the data, I evaluate the model to estimate the labor allocations. The results of this trade balance augmented model replicate the structural change over the whole sample period at great accuracy. This result might support the argument that trade imbalances have a substantial eect on the labor markets.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 29919.

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Date of creation: 28 Mar 2011
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Handle: RePEc:pra:mprapa:29919

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Keywords: Structural Change; Trade Balance; Labor Allocation;

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  1. Akos Valentinyi & Berthold Herrendorf, 2008. "Measuring Factor Income Shares at the Sector Level," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(4), pages 820-835, October.
  2. Margarida Duarte & Diego Restuccia, 2006. "The Role of the Structural Transformation in Aggregate Productivity," 2006 Meeting Papers, Society for Economic Dynamics 415, Society for Economic Dynamics.
  3. 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, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(2), pages 431-52, May.
  4. Jeffrey D. Sachs & Howard J. Shatz, 1994. "Trade and Jobs in Manufacturing," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, Economic Studies Program, The Brookings Institution, vol. 25(1), pages 1-84.
  5. L. Rachel Ngai & Christopher Pissarides, 2004. "Structural change in a multi-sector model of growth," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 3550, London School of Economics and Political Science, LSE Library.
  6. Mankiw, N Gregory & Romer, David & Weil, David N, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 107(2), pages 407-37, May.
  7. Francisco Alvarez-Cuadrado & Markus Poschke, 2009. "Structural Change Out Of Agriculture: Labor Push Versus Labor Pull," Departmental Working Papers, McGill University, Department of Economics 2009-08, McGill University, Department of Economics.
  8. Francisco J. Buera & Joseph Kaboski, 2008. "Scale and the origins of structural change," Working Paper Series, Federal Reserve Bank of Chicago WP-08-06, Federal Reserve Bank of Chicago.
  9. Uy, Timothy & Yi, Kei-Mu & Zhang, Jing, 2013. "Structural change in an open economy," Journal of Monetary Economics, Elsevier, Elsevier, vol. 60(6), pages 667-682.
  10. Piyabha Kongsamut & Sergio Rebelo & Danyang Xie, 1997. "Beyond Balanced Growth," NBER Working Papers, National Bureau of Economic Research, Inc 6159, National Bureau of Economic Research, Inc.
  11. Richard Rogerson, 2008. "Structural Transformation and the Deterioration of European Labor Market Outcomes," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 116(2), pages 235-259, 04.
  12. Gollin, Douglas & Parente, Stephen L. & Rogerson, Richard, 2007. "The food problem and the evolution of international income levels," Journal of Monetary Economics, Elsevier, Elsevier, vol. 54(4), pages 1230-1255, May.
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