American Economic Review Vol. 97 No. 1 2007

Structural Change in a Multisector Model of Growth

L. Rachel Ngai¹; Christopher A. Pissarides²

¹ Centre for Economic Performance, London School of Economics and CEPR. · ² Centre for Economic Performance, London School of Economics, CEPR, and IZA.

Abstract

We study a multisector model of growth with differences in TFP growth rates across sectors and derive sufficient conditions for the coexistence of structural change, characterized by sectoral labor reallocation and balanced aggregate growth. The conditions are weak restrictions on the utility and production functions. Along the balanced growth path, labor employed in the production of consumption goods gradually moves to the sector with the lowest TFP growth rate, until in the limit it is the only sector with nontrivial employment of this kind. The employment shares of intermediate and capital goods remain constant during the reallocation process.

DOI

10.1257/aer.97.1.429

Volume

97

Issue

1

Pages

429-443

Language

en

Sources

bibtex:phds-export.bib crossref

Cite

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