Structural Change and Non-Constant Biased Technical Change [Job market paper]
(revised and resubmitted)
Empirical evidence suggests that the differences in rates of technical progress across sectors are time-variant, implying that the bias in technological change is not constant. In this paper, we analyze the implications of this nonconstant sectoral biased technical change for structural change and we assess whether this is an important factor behind structural transformations. To this end, we develop a multi-sectoral growth model where TFP growth rates across sectors are non-constant. We calibrate our model to match the development of the U.S. economy during the twentieth century. Our findings show that, by assuming nonconstant biased technical change, a purely technological approach is able to replicate the sectoral transformations in the U.S. economy not only after but also prior to the World War II.
Kuznets meets Lucas: Structural Change and Human Capital
This paper develops a multi-sector growth model with human capital accumulation. In this model, human capital induces structural change through two channels: changes in relative prices due to differences in the strength of sectoral externalities, and changes in the investment rate of physical and human capital. We calibrate our model to match the development patterns of U.S. economy during the twentieth century. We show that the model explains i) structural change; ii) the differences between employment and value added shares across sectors; and iii) the path of human capital accumulation. We outline that imbalances between physical and human capital contribute to explain structural change as well as income differences across countries.
Leisure time and the Sectoral Composition of Employment [with Xavier Raurich]
(work in progress)
In the second half of the twenty century we observe two important patterns of structural change; …rst, a large shift of employment from the agriculture and manufacturing sectors to the service sector, and, second, an increase in leisure time. We relate these two patterns of structural change by arguing that during leisure time we consume recreational services. The observed increase in leisure time then implies an increase in the consumption of these services, which introduces a new mechanism of structural change. In order to measure the impact of this mechanism, we construct a multi-sector exogenous growth model with biased technological change. The new feature of the model is the introduction of recreational activities, which depend on both leisure time and on the consumption of recreational services. We introduce these activities by assuming a non-homothetic nested CES utility function. The model explains the two patterns of structural change. We also show that the introduction of these activities improves the performance of the numerical simulations. We conclude that the increase in recreational activities is an important feature of structural change.