A Simple Theory of Structural Transformation

Max Gillman

No E2011/4, Cardiff Economics Working Papers from Cardiff University, Cardiff Business School, Economics Section

Abstract: The paper presents a theory of the industrial transformation amongst sectors using endogenous growth theory. Allowing only a slight upward trend in the productivity of the human capital sector, combined with ascending degrees of human capital shares of sectoral output, in say, agriculture, manufacturing and services, output gradually shifts relatively over time from agriculture to manufacturing and to services. Abstracting from international trade theory, sectors intensive in the factor that is becoming relatively more plentiful find their relative outputs expanding. Adding more sectors of greater human capital intensity causes labor time to decrease within each sector, as shown for agriculture, and in general for any number of sectors.

Keywords: Human Capital Intensity; Sectoral Allocation; Labor Shares; Secular Endogenous Growth (search for similar items in EconPapers)
JEL-codes: E25 F11 J24 O14 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2011-02, Revised 2011-05
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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