IDEAS home Printed from https://ideas.repec.org/p/scp/wpaper/06-44.html
   My bibliography  Save this paper

Complementarity and Transition to Modern Economic Growth

Author

Listed:
  • Hyeok Jeong
  • Yong Kim

Abstract

In developing countries, the gradual transition to modern growth seems puzzling given the large productivity growth gap between traditional and modern sectors. We document this transition and develop a theory that resolves this puzzle. The key forces are sector-specific complementarity between work-experience and labor, and exogenous technical progress present only in the modern sector. Using nationally representative micro data from the Socio-Economic Survey of Thailand (1976-1996), we measure the theory by estimating cross-sectional earnings functions, and assess if the model jointly captures the observed transition dynamics of earnings growth and inequality. The model successfully explains the gradual transition, stagnation then take-off of aggregate earnings, and the rise and fall of experience-earnings profiles in Thailand.

Suggested Citation

  • Hyeok Jeong & Yong Kim, 2006. "Complementarity and Transition to Modern Economic Growth," IEPR Working Papers 06.44, Institute of Economic Policy Research (IEPR).
    • Handle: RePEc:scp:wpaper:06-44
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Galor, Oded, 2005. "From Stagnation to Growth: Unified Growth Theory," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 4, pages 171-293, Elsevier.
    2. Chari, V V & Hopenhayn, Hugo, 1991. "Vintage Human Capital, Growth, and the Diffusion of New Technology," Journal of Political Economy, University of Chicago Press, vol. 99(6), pages 1142-1165, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Boyan Jovanovic, 2009. "When should firms invest in old capital?," International Journal of Economic Theory, The International Society for Economic Theory, vol. 5(1), pages 107-123, March.
    2. Hyeok Jeong & Robert Townsend, 2007. "Sources of TFP growth: occupational choice and financial deepening," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 32(1), pages 179-221, July.
    3. Raurich, Xavier & Sorolla, Valeri, 2014. "Growth, unemployment and wage inertia," Journal of Macroeconomics, Elsevier, vol. 40(C), pages 42-59.
    4. Jeong, Hyeok, 2008. "Assessment Of Relationship Between Growth And Inequality: Micro Evidence From Thailand," Macroeconomic Dynamics, Cambridge University Press, vol. 12(S2), pages 155-197, September.
    5. Balázs Zélity, 2023. "Age diversity and aggregate productivity," Journal of Population Economics, Springer;European Society for Population Economics, vol. 36(3), pages 1863-1899, July.
    6. Hyeok Jeong & Yong Kim & Iourii Manovskii, 2015. "The Price of Experience," American Economic Review, American Economic Association, vol. 105(2), pages 784-815, February.
    7. Jeong,Hyeok, 2020. "Productivity Growth and Efficiency Dynamics of Korean Structural Transformation," Policy Research Working Paper Series 9285, The World Bank.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Francesco Lancia & Giovanni Prarolo, 2012. "A politico-economic model of aging, technology adoption and growth," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(3), pages 989-1018, July.
    2. Vogel, Edgar, 2011. "Human Capital and the Demographic Transition: Why Schooling Became Optimal," MEA discussion paper series 11247, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    3. Chakraborty, Shankha & Papageorgiou, Chris & Pérez Sebastián, Fidel, 2010. "Diseases, infection dynamics, and development," Journal of Monetary Economics, Elsevier, vol. 57(7), pages 859-872, October.
    4. Kawalec Paweł, 2020. "The dynamics of theories of economic growth: An impact of Unified Growth Theory," Economics and Business Review, Sciendo, vol. 6(2), pages 19-44, June.
    5. Antonin BERGEAUD & Gilbert Cette & Rémy Lecat, 2017. "What role did education, equipment age and technology play in 20th century productivity growth?," Rue de la Banque, Banque de France, issue 43, may..
    6. Dietrich Vollrath, 2009. "The dual economy in long-run development," Journal of Economic Growth, Springer, vol. 14(4), pages 287-312, December.
    7. Xavier Raurich & Thomas Seegmuller, 2017. "Growth and Bubbles: The Interplay between Productive Investment and the Cost of Rearing Children," Working Papers halshs-01563555, HAL.
    8. Tiago Neves Sequeira & Marcelo Santos, 2019. "Technology in 1500 and genetic diversity," Empirical Economics, Springer, vol. 56(4), pages 1145-1165, April.
    9. Jaume Ventura & Hans-Joachim Voth, 2015. "Debt into growth: How sovereign debt accelerated the first Industrial Revolution," Economics Working Papers 1483, Department of Economics and Business, Universitat Pompeu Fabra.
    10. John Carter Braxton & Kyle F. Herkenhoff & Jonathan Rothbaum & Lawrence Schmidt, 2021. "Changing Income Risk across the US Skill Distribution: Evidence from a Generalized Kalman Filter," Opportunity and Inclusive Growth Institute Working Papers 55, Federal Reserve Bank of Minneapolis.
    11. Elgin, Ceyhun, 2012. "A Theory Of Economic Development With Endogenous Fertility," Macroeconomic Dynamics, Cambridge University Press, vol. 16(5), pages 686-705, November.
    12. Mayshar, Joram & Moav, Omer & Neeman, Zvika, 2011. "Transparency, Appropriability and the Early State," CEPR Discussion Papers 8548, C.E.P.R. Discussion Papers.
    13. repec:spo:wpecon:info:hdl:2441/2241 is not listed on IDEAS
    14. James Foreman-Peck & Peng Zhou, 2021. "Fertility versus productivity: a model of growth with evolutionary equilibria," Journal of Population Economics, Springer;European Society for Population Economics, vol. 34(3), pages 1073-1104, July.
    15. Gueorgui Kambourov & Iourii Manovskii, 2000. "Occupational Mobility and Wage Inequality, Second Version," PIER Working Paper Archive 04-026, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 15 Jun 2004.
    16. Gonçola Monteiro & Alvaro Pereira, 2006. "From Growth Spurts to Sustained Growth," Discussion Papers 06/24, Department of Economics, University of York.
    17. Baudin, Thomas, 2010. "A Role For Cultural Transmission In Fertility Transitions," Macroeconomic Dynamics, Cambridge University Press, vol. 14(4), pages 454-481, September.
    18. Azarnert, Leonid V., 2010. "Immigration, fertility, and human capital: A model of economic decline of the West," European Journal of Political Economy, Elsevier, vol. 26(4), pages 431-440, December.
    19. Bobonis, Gustavo J. & Morrow, Peter M., 2014. "Labor coercion and the accumulation of human capital," Journal of Development Economics, Elsevier, vol. 108(C), pages 32-53.
    20. Barth, Erling & Davis, James C. & Freeman, Richard B. & McElheran, Kristina, 2023. "Twisting the demand curve: Digitalization and the older workforce," Journal of Econometrics, Elsevier, vol. 233(2), pages 443-467.
    21. Weiss, Yoram, 1995. "Growth and Labor Mobility," Foerder Institute for Economic Research Working Papers 275600, Tel-Aviv University > Foerder Institute for Economic Research.

    More about this item

    Keywords

    Sector-Specific Complementarity; Modern Economic Growth; TFP and Inequality;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:scp:wpaper:06-44. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/ieuscus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.