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A Closer Look at the Mechanism of Structural Transformation: the Role of Land- versus Labor-Augmenting Technical Change in Agriculture

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  • Arnaud Daymard

    (Université de Cergy-Pontoise, THEMA)

Abstract

This paper analyzes a simple two-sector model of structural change to illuminate the factor bias of technical change in the process of structural transformation. Both land- and labor-augmenting technical changes are effective when households enjoy food level consumption close to the level of subsistence. However, as the economy moves away from the state of subsistence, the absolute and relative effectiveness of land- and labor-augmenting technical changes depends on the elasticity of substitution between land and labor. Calibration of the model for today’s developing countries suggest that all countries can benefit from labor improvements but only some regions of the world will benefit from an emphasis on land improvements.

Suggested Citation

  • Arnaud Daymard, 2018. "A Closer Look at the Mechanism of Structural Transformation: the Role of Land- versus Labor-Augmenting Technical Change in Agriculture," THEMA Working Papers 2018-11, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    • Handle: RePEc:ema:worpap:2018-11
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    References listed on IDEAS

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    More about this item

    Keywords

    structural transformation; agricultural productivity; technical change;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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