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American Economic Review: Vol. 97 No. 1 (March 2007)

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Structural Change in a Multisector Model of Growth

Article Citation

Ngai, L. Rachel, and Christopher A. Pissarides. 2007. "Structural Change in a Multisector Model of Growth." American Economic Review, 97(1): 429-443.

DOI: 10.1257/aer.97.1.429

Abstract

We study a multisector model of growth with differences in TFP growth rates across sectors and derive sufficient conditions for the coexistence of structural change, characterized by sectoral labor reallocation and balanced aggregate growth. The conditions are weak restrictions on the utility and production functions. Along the balanced growth path, labor employed in the production of consumption goods gradually moves to the sector with the lowest TFP growth rate, until in the limit it is the only sector with nontrivial employment of this kind. The employment shares of intermediate and capital goods remain constant during the reallocation process. (JEL O41)

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Authors

Ngai, L. Rachel
Pissarides, Christopher A.


American Economic Review


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