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Knowledge-based structural change

Author

Listed:
  • Kevin Genna

    (Institut Louis Bachelier)

  • Christian Ghiglino

    (University of Essex)

  • Kazuo Nishimura

    (Kobe University)

  • Alain Venditti

    (Aix-Marseille University)

Abstract

How will structural change unfold beyond the rise of services? Motivated by the observed dynamics within the service sector we propose a model of structural change in which productivity is endogenous and output is produced with two intermediate substitutable capital goods. In the productive sector the accumulation of specialized skills leads to an unbounded increase in TFP, as sector becoming asymptotically dominant. We are then able to recover the increasing shares of workers, the increasing real and nominal shares of the output observed in productive service and IT sectors in the US. Interestingly, the economy follows a growth path converging to a particular level of wealth that depends on the initial price of capital and knowledge. As a consequence, countries with the same fundamentals but lower initial wealth will be characterized by lower asymptotic wealth.

Suggested Citation

  • Kevin Genna & Christian Ghiglino & Kazuo Nishimura & Alain Venditti, 2024. "Knowledge-based structural change," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 78(4), pages 1333-1388, December.
    • Handle: RePEc:spr:joecth:v:78:y:2024:i:4:d:10.1007_s00199-024-01587-4
    DOI: 10.1007/s00199-024-01587-4
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    More about this item

    Keywords

    Two-sector model; Technological knowledge; Constant elasticity of substitution; non-balanced endogenous growth; Structural change; Kaldor and Kuznets facts;
    All these keywords.

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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