Complementarity and Transition to Modern Economic Growth

Hyeok Jeong () and Yong Kim

No 06.44, IEPR Working Papers from Institute of Economic Policy Research (IEPR)

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.

Keywords: Sector-Specific Complementarity; Modern Economic Growth; TFP and Inequality (search for similar items in EconPapers)
JEL-codes: O11 O47 J31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev, nep-sea and nep-tra
Date: 2006-02
View list of references View citations in EconPapers

Downloads: (external link)
http://www.usc.edu/dept/LAS/economics/IEPR/Working ... _%5BJeong,Kim%5D.pdf First version, 2006 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:scp:wpaper:06-44

Access Statistics for this paper

More papers in IEPR Working Papers from Institute of Economic Policy Research (IEPR)
Contact information at EDIRC.
Series data maintained by Farideh Motamedi ().