This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. Journals
  3. American Economic Review
  4. March 2007
  5. Structural Change in a Multisector Model of Growth

Structural Change in a Multisector Model of Growth

  • L. Rachel Ngai
  • Christopher A. Pissarides
American Economic Review
vol. 97, no. 1, March 2007
(pp. 429-443)
Download Full Text PDF

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)

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

JEL Classification

  • E22 Capital; Investment; Capacity
  • O41 One, Two, and Multisector Growth Models