The impact of intersectoral labour reallocation on economic growth

H Poirson

Journal of African Economies, 2001, vol. 10, issue 1, 37-63

Abstract: This paper explains economic growth differences in an aggregate production function framework, where labor reallocation from agriculture to modern sectors influences labor efficiency growth. The econometric analysis uses a panel of 65 developing and industrial countries over 1960-90. The results highlight: (i) differences in the impact of labor reallocation on growth, resulting from variations in the intersectoral wedge in labor productivities; (ii) the significance of labor reallocation effects, even after controlling for capital accumulation, initial conditions and country effects, and adjusting for endogeneity; (iii) their role in explaining slow productivity growth in Africa; and (iv) the role of initial conditions and capital accumulation in explaining differences in labor reallocation rates.

Date: 2001
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