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Structural Transformation, the Push-Pull Hypothesis and the Labour Market

Fabio Monteforte

Bristol Economics Discussion Papers from Department of Economics, University of Bristol, UK

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 gives a quantitative reassessment of the importance of the labour reallocation bonus in structural transformations 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; urban 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)
New Economics Papers: this item is included in nep-dge and nep-gro
Date: 2015-04-20, Revised 2017-12-01
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Handle: RePEc:bri:uobdis:15/654