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Structural Change and Deindustrialization

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  • Michael Sposi

    (Southern Methodist University)

  • Jing Zhang

    (Federal Reserve Bank of Chicago)

  • Kei-Mu Yi

    (University of Houston)

Abstract

We confirm two of Rodrik's (2016) premature deindustrialization facts: Compared to the advanced economies, countries that have industrialized more recently have had a lower industry share of employment and lower income per capita at their industrial peak. To understand these facts better, we develop a dynamic, multi-sector, multi-country model of structural change that embodies several channels by which structural change can affect industrial employment. We calibrate the model, and back out the "wedges" that account for the evolution of the model's endogenous variables. We then feed the wedges into the model to assess the relative importance of each in accounting for the deindustrialization in recent years.

Suggested Citation

  • Michael Sposi & Jing Zhang & Kei-Mu Yi, 2019. "Structural Change and Deindustrialization," 2019 Meeting Papers 1328, Society for Economic Dynamics.
  • Handle: RePEc:red:sed019:1328
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    References listed on IDEAS

    as
    1. Michael Sposi & Jing Zhang & Kei-Mu Yi, 2018. "Accounting for Structural Change Over Time: A Case Study of Three Middle-Income Countries," 2018 Meeting Papers 1141, Society for Economic Dynamics.
    2. Sposi, Michael, 2019. "Evolving comparative advantage, sectoral linkages, and structural change," Journal of Monetary Economics, Elsevier, vol. 103(C), pages 75-87.
    3. Diego Comin & Danial Lashkari & Martí Mestieri, 2021. "Structural Change With Long‐Run Income and Price Effects," Econometrica, Econometric Society, vol. 89(1), pages 311-374, January.
    4. Logan T. Lewis & Ryan Monarch & Michael Sposi & Jing Zhang, 2018. "Structural Change and Global Trade," International Finance Discussion Papers 1225, Board of Governors of the Federal Reserve System (U.S.).
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