Two Perspectives on Preferences and Structural Transformation

Berthold Herrendorf, Richard Rogerson and Akos Valentinyi ()

American Economic Review, 2013, vol. 103, issue 7, 2752-89

Abstract: We assess the empirical importance of changes in income and relative prices for structural transformation in the postwar United States. We explain two natural approaches to the data: sectors may be categories of final expenditure or value added; e.g., the service sector may be the final expenditure on services or the value added from service industries. We estimate preferences for each approach and find that with final expenditure income effects are the dominant force behind structural transformation, whereas with value-added categories price effects are more important. We show how the inputoutput structure of the United States can reconcile these findings.

JEL-codes: E21 L16 (search for similar items in EconPapers)
Date: 2013
Note: DOI: 10.1257/aer.103.7.2752
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Citations: View citations in EconPapers (311)

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Related works:
Working Paper: Two Perspectives on Preferences and Structural Transformation (2011)
Working Paper: Two Perspectives on Preferences and Structural Transformation (2009)
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