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Knowledge-Based Structural Change

Kévin Genna (), Christian Ghiglino (), Kazuo Nishimura () and Alain Venditti ()

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Abstract: How will structural change unfold beyond the rise of services? Motivated by the observed dynamics within the service sector we propose a model of structural change in which productivity is endogenous and output is produced with two intermediate substitutable capital goods. In the progressive sector the accumulation of knowledge leads to an unbounded increase in TFP, as sector becoming asymptotically dominant. We are then able to recover the increasing shares of workers, the increasing real and nominal shares of the output observed in progressive service and IT sectors in the US. Interestingly, the economy follows a growth path converging to a particular level of wealth that depends on the initial price of capital and knowledge. As a consequence, countries with the same fundamentals but lower initial wealth will be characterized by lower asymptotic wealth.

Keywords: two-sector model; technological knowledge; constant elasticity of substitution; non-balanced endogenous growth; structural change; Kaldor and Kuznets facts (search for similar items in EconPapers)
Date: 2021-03
New Economics Papers: this item is included in nep-hme, nep-knm and nep-ure
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