Structural Transformation and the Volatility of Aggregate Output in OECD Countries / Constant Lonkeng Ngouana.

Format:

Book

Government document

Author/Creator:

Lonkeng Ngouana, Constant.

Series:

IMF Working Papers; Working Paper ; No. 2013/043

IMF Working Papers

Language:

English

Subjects (All):

Service industries--OECD countries.

Service industries.

Gross national product--OECD countries.

Gross national product.

Labor productivity--OECD countries.

Labor productivity.

Physical Description:

1 online resource (30 p.)

Place of Publication:

Washington, D.C. : International Monetary Fund, 2013.

Language Note:

English

Summary:

This paper finds a negative relationship between the employment share of the service sector and the volatility of aggregate output in the OECD—after controlling for the level of financial development. This result reflects volatility differentials across sectors: labor productivity is more volatile in agriculture and manufacturing than in services. Aggregate output would therefore become less volatile as labor moves away from agriculture and manufacturing and toward the service sector. I examine the quantitative role of these labor shifts—termed structural transformation—on the volatility of aggregate output in OECD countries. I first calibrate to the U.S. economy an indivisible labor model in which the reallocation of labor across sectors emerges endogenously from sectoral labor productivity growth differentials. The setup is then used to generate the time path of labor shares in agriculture, manufacturing and services in individual countries. Finally, I perform a set of counterfactual analyzes in which the reallocation of labor across sectors is constrained endogenously. I find that the secular shift of labor towards the service sector was volatility-reducing in OECD countries during 1970–2006.

Contents:

Cover; Contents; I. Introduction; II. Empirical Evidence; Figures; 1. Employment Share of the Service Sector and Aggregate Output Volatility in the OECD, 1970-2006.; III. The Model; A. The Economic Environment; B. Preferences; C. Analytical Solution to the Model; D. Calibration; IV. Results; A. Taking the Model to the Data; Tables; 1. Parameter Values; 2. Sectoral Labor Reallocation in the U.S.: Model vs. Data.; B. Counterfactual Experiments; 3. Employment Share of the Service Sector and Aggregate Output Volatility in the OECD (1970-2006): Model

2. The Role of Structural Transformation on Aggregate Output Volatility4. Sectoral Labor Reallocation in OECD Countries: Model vs. Data; V. Conclusion; References; Appendices; A. Data and Sources; B. Tables and Figures; 5. Summary Statistics on Sectoral Volatilities Across OECD Countries.; 6. The Volatility of Aggregate Output in OECD Countries (actual and trend).; 7. Sectoral Annual Hours Worked per Person Engaged in the US (in thousands).

Notes:

February 2013.

Includes bibliographical references.

Description based on online resource; title from PDF title page (ebrary, viewed September 26, 2014).

ISBN:

9781475599251

1475599250

9781475575699

1475575696

9781299395046

129939504X

9781475544701

1475544707