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Structural change, the push-pull hypothesis and the Spanish labour market

Fabio Monteforte

Economic Modelling, 2020, vol. 86, issue C, 148-169

Abstract: This paper proposes a small-scale general equilibrium model of structural transformation with a non-agricultural labour market characterized by search frictions. The model is used to investigate the role of sectoral TFPs as main drivers of structural change and a new growth accounting exercise allows a quantitative reassessment of the importance of the labour reallocation bonus in structural transformation in the presence of labour market frictions. The model is calibrated to data for post-war Spain and its transition from dictatorship to democracy. Counterfactual simulations point towards productivity improvements in agriculture as the main driver, while modifications in labour market institutions affect mainly the labour market itself, with only a modest effect on structural change.

Keywords: Dual economies; Matching frictions; Non-agricultural unemployment; Structural transformation; Growth accounting; Solow residual (search for similar items in EconPapers)
JEL-codes: J40 O10 O11 O41 O47 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.econmod.2019.06.008

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