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Structural change in an open economy

Kei-Mu Yi and Jing Zhang ()

No 456, Staff Report from Federal Reserve Bank of Minneapolis

Abstract: We develop a tractable, three-sector model to study structural change in a two-country world. The model features an endogenous pattern of trade dictated by comparative advantage. We derive an intuitive expression linking sectoral employment shares to sectoral expenditure shares and to sectoral net export shares of total GDP. Changes in productivity and in trade barriers affect expenditure and net export shares, and thus, employment shares, across sectors. We show how these driving forces can generate the \\"hump\\" pattern that characterizes the manufacturing employment share as a country develops, even when manufacturing is the sector with the highest productivity growth.

Date: 2011
New Economics Papers: this item is included in nep-dge and nep-int
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Related works:
Journal Article: Structural change in an open economy (2013) Downloads
Working Paper: Structural change in an open economy (2013) Downloads
Working Paper: Structural Change in an Open Economy (2010) Downloads
Working Paper: Structural Change in an Open Economy (2009) Downloads
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