Dualism and Cross-Country Growth Regressions
60 Pages Posted: 22 Oct 2004
Date Written: September 2004
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.
Keywords: growth, convergence, structural change
JEL Classification: O1, O4
Suggested Citation: Suggested Citation