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Decomposing Structural Change

Author

Listed:
  • Alonso-Carrera Jaime

    (Departamento de Fundamentos del Análisis Económico, Universidade de Vigo, Facultad de Ciencias Económicas y Empresariales, Campus As Lagoas-Marcosende, 36310 Vigo, Spain)

  • Freire-Serén María Jesús

    (Departamento de Fundamentos del Análisis Económico and GRiEE, Universidade de Vigo, Facultad de Ciencias Económicas y Empresariales, Campus As Lagoas-Marcosende, 36310 Vigo, Spain)

  • Raurich Xavier

    (Departament d’Economia, Universitat de Barcelona, Facultat d’Economia i Empresa, Avinguda Diagonal 696, 08034 Barcelona, Spain)

Abstract

We identify the mechanisms governing the propagation of technological shocks to the sectoral allocation of labor in a non-parameterized growth model. These propagation mechanisms are: (i) the change in aggregate income; whose effect on sectoral composition depends on the income elasticities of consumption demand; (ii) the change in the relative prices of consumption goods, which alters the sectoral composition depending on the Allen-Uzawa elasticities of substitution between goods; (iii) the change in the rental rates, whose effect on sectoral composition is determined by the sectoral elasticities of substitution between capital and labor; and, (iv) the direct effect of the sector and factor bias of the technological change. From this analysis, we derive an accounting method to measure the contribution of these propagation mechanisms to structural change in parameterized growth models. By using some well-known parameterizations, we account for the contribution of each mechanism to the U.S. structural change in the period 1948–2010.

Suggested Citation

  • Alonso-Carrera Jaime & Freire-Serén María Jesús & Raurich Xavier, 2024. "Decomposing Structural Change," The B.E. Journal of Macroeconomics, De Gruyter, vol. 24(2), pages 715-748.
    • Handle: RePEc:bpj:bejmac:v:24:y:2024:i:2:p:715-748:n:1002
    DOI: 10.1515/bejm-2023-0124
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    More about this item

    Keywords

    structural change; non-homothetic preferences; sectoral productivity;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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