Dualism and Cross-Country Growth Regressions
Ifo Institute for Economic Research; Institute for the Study of Labor (IZA); CESifo (Center for Economic Studies and Ifo Institute for Economic Research); University of Munich - Ifo Institute for Economic Research
Jonathan R.W. Temple
University of Bristol - Department of Economics; Centre for Structural Econometrics; Centre for Economic Policy Research (CEPR)
CESifo Working Paper Series No. 1290
This paper examines whether growth regressions should incorporate dualism and structural change. If there is a differential across sectors in the marginal product of labour, changes in the structure of employment can raise aggregate total factor productivity. The paper develops empirical growth models that allow for this effect in a more flexible way than previous work. Estimates of the models imply sizeable marginal product differentials, and reveal that the reallocation of labour can explain a significant fraction of the international variation in TFP growth.
Number of Pages in PDF File: 60
Keywords: growth, convergence, structural change
JEL Classification: O1, O4
Date posted: October 22, 2004
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