Why is Labor in the SSA LDCs Moving from One Low Productivity Sector to Another?

Ngwinui Belinda Azenui ()
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Ngwinui Belinda Azenui: Denison University

The European Journal of Development Research, 2024, vol. 36, issue 1, No 9, 216-242

Abstract: Abstract This paper examines the relationship between structural change, as measured by sectoral composition of employment and value-added (VA), and aggregate productivity growth for sub-Sahara African (SSA) Least Developed Countries (LDCs), using panel data from 1991 to 2018. First, a Granger causality test finds that the relationship between structural change and economic growth is bidirectional. Next, the Pooled Mean Group, a dynamic panel data estimator teases out short-run and long-run effects of structural change on economic growth. The results suggest that the magnitude of labor and VA reallocation across sectors is not large enough to have a significant impact on economic growth, implying that the direction of structural change is important when analyzing its impact on growth in the SSA LDCs. The paper also explains why labor in the SSA LDCs moves from one low productivity sector to another and how that pans out for development.

Keywords: Aggregate labor productivity growth; Structural change; Sub-Saharan African LDCs (search for similar items in EconPapers)
JEL-codes: O11 O47 O55 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1057/s41287-023-00599-5

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