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Structural Change in an Open Economy

Listed author(s):
  • Jing Zhang

    (Department of Economics, University of Michigan)

  • Kei-Mu Yi

    (Research Department, Federal Reserve Bank of Philadelphia)

We develop a tractable, three-sector model to study structural change in a two-country world. The model features an endogenous pattern of trade dictated by comparative advantage. We derive an intuitive expression linking sectoral employment shares to sectoral expenditure shares and to sectoral net export shares of total GDP. Changes in productivity and in trade barriers affect expenditure and net export shares, and thus, employment shares, across sectors. We show how these driving forces can generate the "hump" pattern that characterizes the manufacturing employment share as a country develops, even when manufacturing is the sector with the highest productivity growth.

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File URL: https://economicdynamics.org/meetpapers/2009/paper_804.pdf
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Paper provided by Society for Economic Dynamics in its series 2009 Meeting Papers with number 804.

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Date of creation: 2009
Handle: RePEc:red:sed009:804
Contact details of provider: Postal:
Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA

Web page: http://www.EconomicDynamics.org/
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