« Back to Results

Economic Growth and Structural Transformation

Paper Session

Saturday, Jan. 8, 2022 3:45 PM - 5:45 PM (EST)

Hosted By: Econometric Society
  • Chair: Melissa Dell, Harvard University

Jobless Industrialization: A Tale of Three Sectors

Laura Alfaro
,
Harvard Business School
Marcela Eslava
,
University of The Andes
Marti Mestieri
,
Federal Reserve Bank of Chicago and Northwestern University
Luis Felipe Saenz
,
University of South Carolina

Abstract

Rodrik (2105) documents that the hump-shaped relationship between industrialization (measured by employment or output shares) and income has shifted downwards and moved closer to the origin—a phenomenon coined “premature deindustrialization.” We document that, except for a handful of African countries, value-added shares in manufacturing peak at comparable levels for late and early starters in the development process, while there is a stark decline in the peak employment shares in manufacturing for late starters. To understand the potential drivers of this divergence between employment and value-added shares peaks in late and early starters, we leverage firm-level panel data from the Colombian manufacturing sector spanning over five decades. We supplement these data with cross-sectional evidence for the agricultural and service sector. Guided by a model of structural change with firm heterogeneity, our preliminary analysis suggests that the primary driver of this divergence is capital-biased technological change within manufacturing. We also document cross-firm heterogeneity in capital-biased technological change within manufacturing. We find little evidence supporting alternative mechanisms such as international trade or changes in markups.

European Immigrants and the United States' Rise to the Technological Frontier

Costas Arkolakis
,
Yale University
Sun Kyoung Lee
,
Columbia University
Michael Peters
,
Yale University

Abstract

We study the role of European Immigration on local and aggregate economic growth in the United States between 1880 and 1920. We employ a big data approach and link, at the individual-level, information from the Population Census, the universe of patents
and millions of historical immigration records. We find that immigrants were more prolific innovators than natives, and document large differences in innovation potential across nationalities and regions in the United States. To measure the importance of immigrants for the creation of new ideas and economic growth, we develop a new spatial model of growth through dissemination of knowledge and workers' mobility. The model allows us to use our micro and regional empirical findings to measure immigrants'
innovation human capital and the degree of knowledge diffusion which regulates scale effects. We quantitatively analyze the effects of imposing major immigration restrictions on American economic growth in the 19th and early 20th century. We find large, accumulating, losses from these restrictions. Both the scale effects and the exclusion of high-human capital immigrants contribute significantly to these losses.

Steering Technological Progress

Anton Korinek
,
University of Virginia
Joseph E. Stiglitz
,
Columbia University

Abstract

Rapid progress in new technologies such as Artificial Intelligence has recently led to widespread anxiety about potential job losses. This paper asks how to guide innovative efforts so as to increase labor demand and create better-paying jobs.  We develop a theoretical framework to identify the properties that make an innovation desirable from the perspective of workers, including its technological complementarity to labor, the factor share of labor in producing the goods involved, and the relative income of the affected workers. Examples of labor-friendly innovations are intelligent assistants who enhance the productivity of human workers. The paper discusses measures to steer technological progress in a desirable direction for workers, ranging from nudges for entrepreneurs to changes in tax, labor market and intellectual property policies to direct subsidies and taxes on innovation. In the future, we find that progress should increasingly be steered to provide workers with utility from the non-monetary aspects of their jobs.

Tillers of Prosperity: Land Ownership, Reallocation, and Structural Transformation

Shuhei Kitamura
,
Osaka University

Abstract

This paper analyzes the impact of a large-scale land ownership reform on the reallocation of capital and labor, and structural transformation. In prewar Japan, labor was abundant and capital was scarce in the agricultural sector. Using a novel dataset, I show that the land reform enforced by the Allies after World War II, which redistributed a large area of farmlands from landlords to tenants and promoted equality, led farmers to use more agricultural machinery and rely less on family labor for production, resulting in an increase in the out-migration of farm children from rural to urban areas and an increase in agricultural income. Then, I quantified the impact of the factor reallocation on the entire economy using a two-sector neoclassical growth model, and found that (a) not only labor reallocation, but also capital reallocation affected economic growth, and (b) the average GDP per capita during the postwar period was 16 percent lower without such reallocation. These results indicate that not only labor, but also capital is an important factor for structural transformation and that the agrarian institution plays a vital role in this process.
JEL Classifications
  • O1 - Economic Development