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Productivity, Structural Change in Employment and Economic Growth

  • Enrique R. Casares

    (Universidad Autónoma Metropolitana)

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    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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    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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    1. Bergin, Paul R. & Glick, Reuven & Taylor, Alan M., 2006. "Productivity, tradability, and the long-run price puzzle," Journal of Monetary Economics, Elsevier, vol. 53(8), pages 2041-2066, November.
    2. Nicholas Oulton, 2000. "Must the growth rate decline? Baumol's unbalanced growth revisited," Bank of England working papers 107, Bank of England.
    3. L. Rachel Ngai & Christopher Pissarides, 2007. "Structural change in a multi-sector model of growth," LSE Research Online Documents on Economics 4468, London School of Economics and Political Science, LSE Library.
    4. Vladimir Klyuev, 2005. "Evolution of the Relative Price of Goods and Services in a Neoclassical Model of Capital Accumulation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 8(3), pages 720-730, July.
    5. Sergio Rebelo & Piyabha Kongsamut & Danyang Xie, 2001. "Beyond Balanced Growth," IMF Working Papers 01/85, International Monetary Fund.
    6. Kiminori Matsuyama, 1991. "Agricultural Productivity, Comparative Advantage and Economic Growth," NBER Working Papers 3606, National Bureau of Economic Research, Inc.
    7. Kuznets, Simon, 1973. "Modern Economic Growth: Findings and Reflections," American Economic Review, American Economic Association, vol. 63(3), pages 247-58, June.
    8. Daron Acemoglu & Veronica Guerrieri, 2008. "Capital Deepening and Nonbalanced Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 116(3), pages 467-498, 06.
    9. Baumol, William J, 1972. "Macroeconomics of Unbalanced Growth: Reply," American Economic Review, American Economic Association, vol. 62(1), pages 150, March.
    10. 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.
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