The Role of the Structural Transformation in Aggregate Productivity

Margarida Duarte and Diego Restuccia

Working Papers from University of Toronto, Department of Economics

Abstract: We investigate the role of sectoral differences in labor productivity in explaining the process of structural transformation - the secular reallocation of labor across sectors - and the time path of aggregate productivity across countries. Using a simple model of the structural transformation that is calibrated to the growth experience of the United States, we measure sectoral labor productivity differences across countries. Productivity differences between rich and poor countries are large in agriculture and services and smaller in manufacturing. Moreover, over time, productivity gaps have been substantially reduced in agriculture and industry but not nearly as much in services. In the model, these sectoral productivity patterns generate implications that are broadly consistent with the cross-country evidence on the structural transformation, aggregate productivity paths, and relative prices. We show that productivity catch-up in industry explains about 50 percent of the gains in aggregate productivity across countries, while low relative productivity in services and the lack of catch-up explains all the experiences of slowdown, stagnation, and decline observed across countries.

Keywords: labor productivity; structural transformation; sectoral productivity; employment; hours; cross-country data (search for similar items in EconPapers)
JEL-codes: O1 O4 (search for similar items in EconPapers)
Pages: 57 pages
Date: 2009-02-19
New Economics Papers: this item is included in nep-eff and nep-lab
References: Add references at CitEc
Citations: View citations in EconPapers (15)

Downloads: (external link)
https://www.economics.utoronto.ca/public/workingPapers/tecipa-348.pdf Main Text (application/pdf)

Related works:
Journal Article: The Role of the Structural Transformation in Aggregate Productivity (2010)
Working Paper: The Role of the Structural Transformation in Aggregate Productivity (2007)
Working Paper: The Role of the Structural Transformation in Aggregate Productivity (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tor:tecipa:tecipa-348

Access Statistics for this paper

More papers in Working Papers from University of Toronto, Department of Economics 150 St. George Street, Toronto, Ontario.
Bibliographic data for series maintained by RePEc Maintainer ().