Structural Transformation and Labor Productivity in Brazil

Marcos Araujo Marcolino and Daniela Costa

Revista Brasileira de Economia - RBE, 2022, vol. 75, issue 4

Abstract: This paper examines the labor reallocation across agriculture, manufacturing, and services, and their impacts on aggregate labor productivity in Brazil from 1950 to 2010. We use a multisector model that features nonhomothetic preferences with constant elasticity of substitution and wedge distortions. This framework allows us to decompose the drivers of labor reallocation into supply-side, demand-side, and wedges. For the 1950-2010 period, demand-side effects were responsible for most of the reallocation of labor away from agriculture towards manufacturing and services. On the other hand, if we focus only on the 1980-2010 sub-period, supply-side drivers become the major determinant for labor reallocation.

Date: 2022
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