The Impact of Intersectoral Labor Reallocationon Economic Growth

Hélène Poirson

No 2000/104, IMF Working Papers from International Monetary Fund

Abstract: This study seeks to explain economic growth differences in an aggregate production function framework, where labor reallocation from agriculture to modern sectors influences labor efficiency growth. The econometric analysis uses a panel of 65 countries over 1960-90. The results highlight: (a) the differences in labor reallocation impact on growth, controlled for using the intersectoral wedge in labor productivities; (b) the significance of labor reallocation effects, even after controlling for capital accumulation, initial conditions, and country effects; (c) the role of slow labor reallocation in explaining the dummy variable for Sub-Saharan Africa; (d) the role of initial education levels in explaining differences in labor reallocation rates.

Keywords: WP; growth rate; Growth; labor reallocation; labor efficiency; education; reallocation effect; reallocation variable; reallocation decision; labor efficiency index; labor reallocation-driven growth; country effect; labor productivity gap; labor reallocation variable; Public expenditure review; Labor productivity; Capital accumulation; Sub-Saharan Africa; South Asia; East Asia; Africa (search for similar items in EconPapers)
Pages: 27
Date: 2000-06-01
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