Essays on Structural Transformation and Inequality
type: CreativeWork
description: Chapter 1: In this chapter, I replace the Cobb–Douglas production function in Acemoglu and Guerrieri (2008) with a two-sector model using the CES production technology to analyze how the U.S. capital deepening process must cause unbalanced growth. The U.S. economy is classified into labor- and capital-intensive sectors. My model shows that due to the difference in the two sectors' elasticities of substitution between capital and labor, capital deepening leads to a growing concentration of labor in the labor-intensive sector, but a continuous reallocation of capital away from this sector. This causes sector outputs to increase at different rates. Combined with exogenous technological progress, this unbalanced growth affects the path of factor costs and output prices. Furthermore, the model shows that even as the real interest rate remains relatively constant and wage rate rises, the labor income share in GDP diminishes over time, and the capital income share increases. The ease with which labor can be replaced with capital in the capital-intensive sector and consumers' preferences for how to combine the two sectors' outputs in their final consumption are key parameters influencing the rate of decline of the labor income share. Chapter 2: Land is a crucial production factor in the agricultural sector. An important recent literature argues that a large part of the very large measured cross-country differences in productivity could be accounted for by land misallocation within developing countries and, in particular, that many countries have too few large farms (e.g. Adamopoulos and Restuccia, 2014). These studies measure misallocation against a USA benchmark established by the assumption that the unobserved distribution of farming skills in the population can be inferred from the observed size distribution of farms in the USA, measured at a national level. This paper uses the US Census of Agriculture data to decompose the US farm size distribution by region and land ty…
abstract: Chapter 1: In this chapter, I replace the Cobb–Douglas production function in Acemoglu and Guerrieri (2008) with a two-sector model using the CES production technology to analyze how the U.S. capital deepening process must cause unbalanced growth. The U.S. economy is classified into labor- and capital-intensive sectors. My model shows that due to the difference in the two sectors' elasticities of substitution between capital and labor, capital deepening leads to a growing concentration of labor in the labor-intensive sector, but a continuous reallocation of capital away from this sector. This causes sector outputs to increase at different rates. Combined with exogenous technological progress, this unbalanced growth affects the path of factor costs and output prices. Furthermore, the model shows that even as the real interest rate remains relatively constant and wage rate rises, the labor income share in GDP diminishes over time, and the capital income share increases. The ease with which labor can be replaced with capital in the capital-intensive sector and consumers' preferences for how to combine the two sectors' outputs in their final consumption are key parameters influencing the rate of decline of the labor income share. Chapter 2: Land is a crucial production factor in the agricultural sector. An important recent literature argues that a large part of the very large measured cross-country differences in productivity could be accounted for by land misallocation within developing countries and, in particular, that many countries have too few large farms (e.g. Adamopoulos and Restuccia, 2014). These studies measure misallocation against a USA benchmark established by the assumption that the unobserved distribution of farming skills in the population can be inferred from the observed size distribution of farms in the USA, measured at a national level. This paper uses the US Census of Agriculture data to decompose the US farm size distribution by region and land ty…
author: Lin, Yaoqi
keywords: Economics, Growth and Development, Factor Allocation, Structural Transformation, Inequality
date published: 2023-06-01T07:00:00Z
date modified: 2026-07-24T02:00:04Z
provider: City University of New York - Graduate Center
publisher: Networked Digital Library of Theses and Dissertations
type: WebPage
source organization: The Graduate School and University Center of The City University of New York