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The Role of the Structural Transformation in Aggregate Productivity

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Author Info
Margarida Duarte
Diego Restuccia

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Abstract

We investigate the role of sectoral differences in labor productivity and the process of structural transformation (the secular reallocation of labor across sectors) in accounting for the time path of aggregate productivity across countries. Using a simple model of the structural transformation that is calibrated to the growth experience of the United States, we measure sectoral labor productivity differences across countries. These differences are large and systematic: labor productivity differences between rich and poor countries are large in agriculture and services and smaller in manufacturing. When fed into the model, these sectoral labor productivity differences and the structural transformation they produce account for more than 50 percent of the fast catch-up in aggregate productivity observed in less developed economies and all of the stagnation and decline observed in more developed economies in recent decades.

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Paper provided by University of Toronto, Department of Economics in its series Working Papers with number tecipa-300.

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Length: 41 pages
Date of creation: 22 Oct 2007
Date of revision:
Handle: RePEc:tor:tecipa:tecipa-300

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Related research
Keywords: labor productivity; structural transformation; sectoral productivity; employment; hours; cross-country data;

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Find related papers by JEL classification:
O1 - Economic Development, Technological Change, and Growth - - Economic Development
O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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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.:
  1. Tasso Adamopoulos & Ahmet Akyol, 2009. "Relative Underperformance Alla Turca," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 12(4), pages 697-717, October. [Downloadable!] (restricted)
    Other versions:
  2. Ngai, Liwa Rachel & Pissarides, Christopher, 2004. "Structural Change in a Multi-Sector Model of Growth," CEPR Discussion Papers 4763, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  3. Laitner, John, 2000. "Structural Change and Economic Growth," Review of Economic Studies, Blackwell Publishing, vol. 67(3), pages 545-61, July.
  4. Baumol, William J, 1972. "Macroeconomics of Unbalanced Growth: Reply," American Economic Review, American Economic Association, vol. 62(1), pages 150, March.
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  6. Jones, Charles I, 1997. "On the Evolution of the World Income Distribution," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 19-36, Summer. [Downloadable!] (restricted)
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  7. Diego Restuccia & Dennis Tao Yang & Xiaodong Zhu, 2003. "Agriculture and Aggregate Productivity: A Quantitative Cross-Country Analysis," Working Papers diegor-03-01, University of Toronto, Department of Economics. [Downloadable!]
    Other versions:
  8. Berthold Herrendorf & Akos Valentinyi, 2006. "Which Sectors Make the Poor Countries so Unproductive?," 2006 Meeting Papers 304, Society for Economic Dynamics. [Downloadable!]
  9. Gollin, Douglas & Parente, Stephen L. & Rogerson, Richard, 2007. "The food problem and the evolution of international income levels," Journal of Monetary Economics, Elsevier, vol. 54(4), pages 1230-1255, May. [Downloadable!] (restricted)
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  10. Margarida Duarte & Diego Restuccia, 2006. "The Structural Transformation and Aggregate Productivity in Portugal," Working Papers tecipa-261, University of Toronto, Department of Economics. [Downloadable!]
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  11. Robert E. Lucas Jr., 2000. "Some Macroeconomics for the 21st Century," Journal of Economic Perspectives, American Economic Association, vol. 14(1), pages 159-168, Winter. [Downloadable!] (restricted)
  12. Richard Rogerson, 2007. "Structural Transformation and the Deterioration of European Labor Market Outcomes," NBER Working Papers 12889, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  13. Timothy J. Kehoe & Edward C. Prescott (), . "Great depressions of the twentieth century," Monograph, Federal Reserve Bank of Minneapolis, number 2007gdott. [Downloadable!]
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  14. V. V. Chari & Patrick J. Kehoe & Ellen R. McGrattan, 1996. "The Poverty of Nations: A Quantitative Exploration," NBER Working Papers 5414, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  15. Dirk Pilat, 1996. "Labour Productivity Levels in OECD Countries: Estimates for Manufacturing and Selected Service Sectors," OECD Economics Department Working Papers 169, OECD, Economics Department. [Downloadable!]
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  17. Ngai, L. Rachel, 2004. "Barriers and the transition to modern growth," Journal of Monetary Economics, Elsevier, vol. 51(7), pages 1353-1383, October. [Downloadable!] (restricted)
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  18. Margarida Duarte & Diego Restuccia, 2006. "The productivity of nations," Economic Quarterly, Federal Reserve Bank of Richmond, issue Sum, pages 195-223. [Downloadable!]
  19. Douglas Gollin & Stephen Parente & Richard Rogerson, 2002. "The Role of Agriculture in Development," American Economic Review, American Economic Association, vol. 92(2), pages 160-164, May. [Downloadable!]
Full references

Cited by:
(explanations, 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.)

  1. Bah, El-hadj M., 2007. "Structural Transformation in Developed and Developing Countries," MPRA Paper 10655, University Library of Munich, Germany, revised 19 Sep 2008. [Downloadable!]
  2. Margarida Duarte & Diego Restuccia, 2007. "The structural transformation and aggregate productivity in Portugal," Portuguese Economic Journal, Springer, vol. 6(1), pages 23-46, April. [Downloadable!] (restricted)
    Other versions:
  3. Margarida Duarte & Diego Restuccia, 2006. "The productivity of nations," Economic Quarterly, Federal Reserve Bank of Richmond, issue Sum, pages 195-223. [Downloadable!]
  4. Diego Restuccia, 2008. "The Latin American Development Problem," Working Papers tecipa-318, University of Toronto, Department of Economics. [Downloadable!]
  5. Bah, El-hadj M., 2007. "A Three-Sector Model of Structural Transformation and Economic Development," MPRA Paper 10654, University Library of Munich, Germany, revised 19 Sep 2008. [Downloadable!]
  6. Badibanga, Thaddee & Diao, Xinshen & Roe, Terry & Somwaru, Agapi, 2008. "Dynamics of Structural Transformation: Understanding the Key Factors That Drive Innovative Activities in Selected Asian and African Countries," Bulletins 43890, University of Minnesota, Economic Development Center. [Downloadable!]
  7. Aoki, Shuhei, 2008. "Was the Barrier to Labor Mobility an Important Factor for the Prewar Japanese Stagnation?," MPRA Paper 8178, University Library of Munich, Germany. [Downloadable!]
  8. Tasso Adamopoulos & Ahmet Akyol, 2009. "Relative Underperformance Alla Turca," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 12(4), pages 697-717, October. [Downloadable!] (restricted)
    Other versions:
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