Sectoral Technology and Structural Transformation

Berthold Herrendorf, Akos Valentinyi () and Christopher Herrington

No 9386, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper assesses how structural transformation is affected by sectoral differences in labor-augmenting technological progress, capital intensity, and substitutability between capital and labor. We estimate CES production functions for agriculture, manufacturing, and services on postwar US data and compare them with Cobb--Douglas production functions with different and with equal capital shares. We find that sectoral differences in labor-augmenting technological progress are the dominant force behind changes in sectoral labor and in relative prices. As a result, Cobb--Douglas production functions with equal capital shares (which by construction abstract from differences in capital intensity and the elasticity of substitution) capture the main economic forces on the technology side behind postwar US structural transformation.

Keywords: Ces production function; Cobb-douglas production function; Elasticity of substitution; Structural transformation (search for similar items in EconPapers)
JEL-codes: O11 O14 (search for similar items in EconPapers)
Date: 2013-03
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Citations: View citations in EconPapers (45)

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Related works:
Journal Article: Sectoral Technology and Structural Transformation (2015)
Working Paper: Sectoral Technology and Structural Transformation (2013)
Working Paper: Sectoral Technology and Structural Transformation (2012)
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