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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. L. Rachel Ngai & Christopher A. Pissarides, 2007. "Structural Change in a Multisector Model of Growth," American Economic Review, American Economic Association, vol. 97(1), pages 429-443, March.
    2. Kuznets, Simon, 1971. "Modern Economic Growth: Findings and Reflections," Nobel Prize in Economics documents 1971-2, Nobel Prize Committee.
    3. Nicholas Oulton, 2000. "Must the growth rate decline? Baumol's unbalanced growth revisited," Bank of England working papers 107, Bank of England.
    4. Vladimir Klyuev, 2004. "Evolution of the Relative Price of Goods and Services in a Neoclassical Model of Capital Accumulation," IMF Working Papers 04/207, International Monetary Fund.
    5. Daron Acemoglu & Veronica Guerrieri, 2006. "Capital Deepening and Non-Balanced Economic Growth," 2006 Meeting Papers 207, Society for Economic Dynamics.
    6. Baumol, William J, 1972. "Macroeconomics of Unbalanced Growth: Reply," American Economic Review, American Economic Association, vol. 62(1), pages 150, March.
    7. Kongsamut, Piyabha & Rebelo, Sérgio & Xie, Danyang, 1997. "Beyond Balanced Growth," CEPR Discussion Papers 1693, C.E.P.R. Discussion Papers.
    8. Paul Bergin & Reuven Glick & Alan M. Taylor, 2004. "Productivity, Tradability, and the Long-Run Price Puzzle," NBER Working Papers 10569, National Bureau of Economic Research, Inc.
    9. Matsuyama, Kiminori, 1992. "Agricultural productivity, comparative advantage, and economic growth," Journal of Economic Theory, Elsevier, vol. 58(2), pages 317-334, December.
    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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