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Sectoral Technology and Structural Transformation

Berthold Herrendorf (), Christopher Herrington and Akos Valentinyi ()

American Economic Journal: Macroeconomics, 2015, vol. 7, issue 4, 104-33

Abstract: We assess how the properties of technology affect structural transformation, i.e., the reallocation of production factors across the broad sectors of agriculture, manufacturing, and services. To this end, we estimate sectoral constant elasticity of substitution (CES) and Cobb-Douglas production functions on postwar US data. We find that differences in technical progress across the three sectors are the dominant force behind structural transformation whereas other differences across sectoral technology are of second order importance. Our findings imply that Cobb-Douglas sectoral production functions that differ only in technical progress capture the main technological forces behind the postwar US structural transformation. (JEL E16, E25, O33, O47)

JEL-codes: E16 E25 O33 O47 (search for similar items in EconPapers)
Date: 2015
Note: DOI: 10.1257/mac.20130041
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Handle: RePEc:aea:aejmac:v:7:y:2015:i:4:p:104-33