DP5655 Dualism and Cross-Country Growth Regressions

Author(s): Jonathan Temple , Ludger Woessmann

Publication Date: April 2006

Keyword(s): structural change , dualism , wage differentials , TFP growth

JEL(s): O11 , O40

Programme Areas: International Macroeconomics

Link to this Page: www.cepr.org/pubs/dps/DP5655.asp

This paper develops empirical growth models suitable for dual economies, and studies the relationship between structural change and economic growth. Structural change matters because, if the marginal product of labour varies across sectors, changes in the structure of employment can raise aggregate productivity. The models in the paper incorporate this effect in a more flexible way than previous work. Estimates of the models imply sizeable marginal product differentials, and indicate that the reallocation of labour makes a significant contribution to the international variation in productivity growth.