Structural Transformation by Cohort

Todd Schoellman and Bart Hobijn

No 1417, 2017 Meeting Papers from Society for Economic Dynamics

Abstract: This paper documents the facts of which workers are reallocated across sectors during the process of structural transformation using repeated cross-sectional microdata covering 47 countries at all levels of development. The key finding is that structural transformation affects primarily the young. More than half of all structural transformation happens between cohorts, meaning that new cohorts choose different sectors than existing ones. Half of the within-cohort reallocation happens by age 30 and most by age 40. We develop and calibrate an overlapping generations model of structural transformation with sector-specific human capital investments that replicates these and other stylized facts. The model generates much slower transitional dynamics than the standard growth model even in the face of a large, one-time shock to TFP.

Date: 2017
New Economics Papers: this item is included in nep-dge
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed017:1417

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