Endogenous Sector-Biased Technological Change and Industrial Policy

Berthold Herrendorf

No 105, 2016 Meeting Papers from Society for Economic Dynamics

Abstract: We build a model of structural transformation with endogenous sector-biased technological change. We show that if the return to specialization is larger in the goods sector than in the service sector, then the equilibrium has the following properties: aggregate growth is balanced; the service sector receives more innovation but the goods sector experiences more productivity growth; structural transformation takes place from goods to services. Compared to the efficient allocation the laissez-faire equilibrium has too much labor in the goods sector, implying that optimal industrial policy should aim to increase, not decrease, the pace of structural transformation.

Date: 2016
New Economics Papers: this item is included in nep-dge, nep-gro and nep-ino
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Endogenous sector–biased technological change and industrial policy (2022)
Working Paper: Endogenous Sector-Biased Technological Change and Industrial Policy (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed016:105

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