Huang, Zongye (2011): Structural Transformation under Trade Imbalances: the Case of Postwar U.S.
This is the latest version of this item.
Download (296Kb) | Preview
A striking feature of the structural change literature is that, even though the U.S. economy is often used as a benchmark for calibration, the traditional model cannot account for the steep decline in manufacturing and rise in services in the United States since early 1980s (Buera and Kaboski, 2009). In order to solve the puzzle, this paper develops a three-sector model to evaluate various factors that could contribute to the structural transformation process from 1950 to 2005. The results show that, in addition to the traditional explanations, such as the non-homothetic preferences and sector-biased productivity progress, trade imbalance is another major source of structural change, which is able to explain about 38 percent of the overall labor share decrease in the American manufacturing. The quantitative predictions replicate the labor movements in the U.S. data, especially can properly explain the recent contraction of manufacturing employment share. This result is robust to different parameter values and alternative labor share measure. This paper is so far the ﬁrst work that considers the intra-industry trade in the structural change literature which might support the argument that trade imbalances have substantial impact on the labor markets.
|Item Type:||MPRA Paper|
|Original Title:||Structural Transformation under Trade Imbalances: the Case of Postwar U.S.|
|English Title:||Structural transformation under trade imbalances: the case of postwar U.S.|
|Keywords:||Structural Change, Trade Balance, Labor Allocation|
|Subjects:||F - International Economics > F1 - Trade > F16 - Trade and Labor Market Interactions
O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O41 - One, Two, and Multisector Growth Models
O - Economic Development, Technological Change, and Growth > O5 - Economywide Country Studies > O51 - U.S.; Canada
F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F43 - Economic Growth of Open Economies
O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O14 - Industrialization; Manufacturing and Service Industries; Choice of Technology
|Depositing User:||Zongye Huang|
|Date Deposited:||10. Sep 2011 17:51|
|Last Modified:||12. Feb 2013 11:49|
ACEMOGLU, D., AND V. GUERRIERI (2008): “Capital deepening and non-balanced economic growth,” Journal of Political Economy, 116(3), 467–498.
Alvarez-Cuadrado, F., and M. Poschke (2011): Structural change out of agriculture: labor push versus labor pull, American Economic Journal: Macroeconomics.
Bah, E.-h. (2009): A Three-Sector Model of Structural Transformation and Economic Development, MPRA Working Paper.
BERNARD, A., J. JENSEN, AND P. SCHOTT (2006): “Survival of the best ﬁt: Exposure to low-wage countries and the (uneven) growth of U.S. manufacturing plants,” Journal of International Economics, 68(1), 219–237.
Branson, W. H. (1971): The Balance of Payments in 1970, Brookings Papers on Economic Activity, 1971(1).
Brauer, D. (2004): What Accounts for the Decline in Manufacturing Employment?, Economic and Budget Issue Brief, the Congressional Budget Office.
Buera, F. J., and J. P. Kaboski (2011): “Scale and the origins of structural change,” Journal of Economic Theory, 1, 1–29.
CABALLERO, R. J., E. FARHI, AND P. GOURINCHAS (2008): “An Equilibrium Model of "Global Imbalances" and Low Interest Rates,” American Economics Review, pp. 358–393.
CASELLI, F., AND J. FEYRER (2007): “The marginal product of capital,” Quarterly Journal of Economics, (May).
COOPER, R. (2008): “Global Imbalances: Globalization, Demography, and Sustainability,” The Journal of Economic Perspectives, 22(3), 93–112.
DOOLEY, M., D. FOLKERTS-LANDAU, AND P. GARBER (2004): “The US current account deficit and economic development: Collateral for a total return swap,” NBER Working Papers, (August).
Duarte, M., and D. Restuccia (2010): The role of the structural transformation in aggregate productivity, Quarterly Journal of Economics, 129(February).
Echevarria, C. (1995): Agricultural development vs. industrialization: Effects of trade, Canadian Journal of Economics, 28(3).
Echevarria, C. (1997): Changes in sectoral composition associated with economic growth, International Economic Review, 38(2).
Englander, A., and A. Mittelstadt (1988): Total factor productivity: macroeconomic and structural aspects of the slowdown, OECD Economic Studies.
FELDSTEIN, M. (1987): “Correcting the trade deficit,” Foreign Affairs, 65(4), 795–806.
FELDSTEIN, M. (2008): “Resolving the global imbalance: The dollar and the us saving rate,” The Journal of Economic Perspectives, 22(3), 113–125.
GLYN, A. (2007): “Explaining Labor’s Declining Share of National Income,” G-24 Policy Brief, (4), 1–2.
Gollin, D., S. Parente, and R. Rogerson (2007): The food problem and the evolution of international income levels, Journal of Monetary Economics, 54(4).
HERRENDORF, B., R. ROGERSON, AND A. VALENTINYI (2009): “Two Perspectives on Preferences and Structural Transformation,” NBER working paper.
JORGENSON, D. W., F. GALLOP, AND B. FRAUMENI (1987): Productivity and economic growth. Amsterdam:North-Holland.
JORGENSON, D. W., AND F. GOLLOP (1992): “Productivity growth in US agriculture: a postwar perspective,” American Journal of Agricultural Economics, 74(3), 745–750.
JORGENSON, D. W., AND K. STIROH (2000): “US economic growth at the industry level,” American Economic Review, 90(2), 161–167.
Kongsamut, P., S. Rebelo, and D. Xie (2001): Beyond balanced growth, Review of Economic Studies, 68(4).
Krugman, P. (1994): The Myth of Asia’s Miracle, Foreign Aairs, 73(6).
KRUGMAN, P., R. BALDWIN, B. BOSWORTH, AND P. HOOPER (1987): “The persistence of the US trade deﬁcit,” Brookings Papers on Economic Activity, 1987(1), 1–55.
Krugman, P., and R. Lawrence (1994): Trade, jobs, and wages, Scientic American.
Kuznets, S. (1966): Modern Economic Growth. New Haven, CT: Yale Univ. Press.
Laitner, J. (2000): Structural Change and Economic Growth, Review of Economic Studies, 67(3),.
Lawrence, R. Z., M. J. Slaughter, R. E. Hall, S. J. Davis, and R. H. Topel (1993): International Trade and American Wages in the 1980s: Giant Sucking Sound or Small Hiccup?, Brookings Papers on Economic Activity. Microeconomics, 1993(2).
LEES, F. (1965): “The US Balance of Payments in the Postwar Period,” Financial Analysts Journal, 21(3), 31–38.
LINDSEY, B. (2004): “Job Losses and Trade A Reality Check,” Cato institute trade briefing paper, 19(19), 1–12.
LJUNGQVIST, L., AND T. SARGENT (2004): Recursive macroeconomic theory. The MIT press, second edi edn.
LONG, N. V., AND F. ALVAREZ-CUADRADO (2011): “Capital Labor Substitution, Structural Change and Growth.”Working Paper.
Maddison, A. (1991): Dynamic forces in capitalist development: A long-run comparative view. Oxford University Press, USA.
MANKIW, N. G., E. PHELPS, AND P. ROMER (1995): “The growth of nations,” Brookings papers on economic activity, 1995(1), 275–326.
Mankiw, N. G., D. Romer, and D. N. Weil (1992): A Contribution to the Empirics of Economic Growth.
MANN, C. (2002): “Perspectives on the US current account deficit and sustainability,” The Journal of Economic Perspectives, 16(3), 131–152.
McQuinn, K., and K. Whelan (2007): Conditional convergence and the dynamics of the capital-output ratio, Journal of Economic Growth, 12(2).
Ngai, L. R., and C. a. Pissarides (2007): Structural Change in a Multisector Model of Growth, American Economic Review, 97(1).
RESTUCCIA, D., D. T. YANG, AND X. ZHU (2008): “Agriculture and aggregate productivity: A quantitative cross-country analysis,” Journal of Monetary Economics, 55(2), 234–250.
Rogerson, R. (2008): Structural Transformation and the Deterioration of European Labor Market Outcomes, Journal of Political Economy, 116(2).
Sachs, J., and H. Shatz (1994): Trade and jobs in US manufacturing, Brookings Papers on Economic Activity, 1994(1).
TIMMER, M. P., AND G. J. VRIES (2008): “Structural change and growth accelerations in Asia and Latin America: a new sectoral data set,” Cliometrica, 3(2), 165–190.
Valentinyi, a., and B. Herrendorf (2008): Measuring factor income shares at the sectoral level, Review of Economic Dynamics, 11(4).
WOLF, M. (2008): Fixing global finance. Johns Hopkins University Press.
Yi, K.-m., and J. Zhang (2010): Structural Change in an Open Economy, Working Papers.
Available Versions of this Item
The Decline of the U.S. Manufacturing: An Explanation from Structural Change. (deposited 04. Apr 2011 02:15)
- Structural Transformation under Trade Imbalances: the Case of Postwar U.S. (deposited 10. Sep 2011 17:51) [Currently Displayed]