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Windfall Resource Income, Productivity Growth, and Manufacturing Employment

Listed author(s):
  • Talan İşcan

    ()

I study the independent impacts of windfall income from non-renewable resource exports and productivity growth on the changing share of employment in manufacturing in an open economy. The framework includes non-unitary income and substitution elasticities, so that both windfall income and productivity growth lead to sectoral reallocation of labor. I use the model to account for the declining share of manufacturing employment in Canada. I find that the relative importance of these factors has varied over time. While productivity growth is responsible for a substantial fraction of the decline in the share of manufacturing employment since 1960, the windfall income from the booming resource sector contributed to this decline significantly during the 2000s, when the Canadian terms of trade improved rather dramatically. Copyright Springer Science+Business Media New York 2015

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File URL: http://hdl.handle.net/10.1007/s11079-014-9330-z
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Article provided by Springer in its journal Open Economies Review.

Volume (Year): 26 (2015)
Issue (Month): 2 (April)
Pages: 279-311

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Handle: RePEc:kap:openec:v:26:y:2015:i:2:p:279-311
DOI: 10.1007/s11079-014-9330-z
Contact details of provider: Web page: http://www.springer.com

Order Information: Web: http://www.springer.com/economics/international+economics/journal/11079/PS2

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