Structural Change in a Multi-Sector Model of Growth

27 Pages Posted: 18 Oct 2005

See all articles by Rachel Ngai

Rachel Ngai

London School of Economics & Political Science (LSE) - Department of Economics; Hong Kong University of Science & Technology (HKUST) - HKUST School of Business and Management

Christopher A. Pissarides

London School of Economics & Political Science (LSE); Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics; Hong Kong University of Science & Technology (HKUST)

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Date Written: October 2005

Abstract

We study a multi-sector model of growth with differences in TFP growth rates across sectors and derive sufficient conditions for the coexistence of structural change, characterized by sectoral labor reallocation, and balanced aggregate growth. The conditions are weak restrictions on the utility and production functions commonly applied by macroeconomists. Per capita output grows at the rate of labor-augmenting technological progress in the capital-producing sector and employment moves to low-growth sectors. In the limit all employment converges to two sectors, the slowest-growing consumption-goods sector and the capital-goods sector.

Keywords: multi-sector growth, structural change, balanced growth, sectoral employment, unbalanced growth

JEL Classification: O41, O14

Suggested Citation

Ngai, Liwa Rachel and Pissarides, Christopher, Structural Change in a Multi-Sector Model of Growth (October 2005). IZA Discussion Paper No. 1800. Available at SSRN: https://ssrn.com/abstract=827367

Liwa Rachel Ngai

London School of Economics & Political Science (LSE) - Department of Economics ( email )

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Hong Kong University of Science & Technology (HKUST) - HKUST School of Business and Management ( email )

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Hong Kong

Christopher Pissarides (Contact Author)

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London WC2A 2AE
United Kingdom
+44 20 7955 7513 (Phone)
+44 20 7831 1840 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Hong Kong University of Science & Technology (HKUST) ( email )

Clearwater Bay
Kowloon, 999999
Hong Kong

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