Structural Change and Non-Constant Biased Technical Change

UB economics Working Papers E15/324

38 Pages Posted: 23 Apr 2015

Date Written: March 25, 2015

Abstract

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 non-constant 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 non-constant 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.

Keywords: Multi-sector growth model, Structural change, Sector biased technical change, Baumol effect.

JEL Classification: O41, O47, O14, E29.

Suggested Citation

Cruz, Edgar, Structural Change and Non-Constant Biased Technical Change (March 25, 2015). UB economics Working Papers E15/324. Available at SSRN: https://ssrn.com/abstract=2597502 or http://dx.doi.org/10.2139/ssrn.2597502

Edgar Cruz (Contact Author)

University of Barcelona ( email )

Gran Via de les Corts Catalanes, 585
Barcelona, 08007
Spain

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