Sectoral Technology and Structural Transformation

Akos Valentinyi, Berthold Herrendorf, Christophe Herrington

Research output: Contribution to journalArticlepeer-review

Abstract

We assess how the properties of technology affect structural transformation, i.e., the reallocation of production factors across the broad sectors of agriculture, manufacturing, and services. To this end, we estimate sectoral constant elasticity of substitution (CES) and Cobb-Douglas production functions on postwar US data. We find that differences in technical progress across the three sectors are the dominant force behind structural transformation whereas other differences across sectoral technology are of second order importance. Our findings imply that Cobb-Douglas sectoral production functions that differ only in technical progress capture the main technological forces behind the postwar US structural transformation.
Original languageEnglish
Pages (from-to)104-33
Number of pages29
JournalAmerican Economic Journal. Macroeconomics
Volume7
Issue number4
DOIs
Publication statusPublished - Oct 2015

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