 Can Traditional Theories of Structural Change Fit The Data?Francisco Buera and Joseph Kaboski Journal of the European Economic Association, 2009, vol. 7, issue 2-3, 469-477 Abstract: Two traditional explanations for structural changes are sector-biased technological progress and non-homothetic preferences. This paper integrates both into an otherwise standard growth model and quantitatively evaluates them vis-a-vis time series. The exercise identifies a set of puzzles for standard theories: (i) the model cannot account for the steep decline in manufacturing and rise in services in the later data; (ii) the standard model requires implausibly low elasticity of substitution across goods to match the consumption and output data; and (iii) the behavior of consumption and output shares differs significantly from that of employment shares. We argue that models that incorporate home production, sector-specific factor distortions, and differences across sectors in the accumulation of human capital are promising avenues to amend the standard models. (JEL: O11, O14, O41) (c) 2009 by the European Economic Association. JEL-codes: O11 O14 O41 (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:tpr:jeurec:v:7:y:2009:i:2-3:p:469-477 Access Statistics for this article Journal of the European Economic Association is currently edited by Xavier Vives, George-Marios Angeletos, Orazio P. Attanasio, Fabio Canova and Roberto Perotti More articles in Journal of the European Economic Association from MIT Press |
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