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I thank Antoine d’Autume, Jean-Claude Berthelemy, Francois Bourguignon, Eve Caroli, Daniel Cohen, Sebastien Dessus, David Dollar, Thierry Magnac, Eswar Prasad, Jean-Marc Robin, and seminar participants at the DELTA-LEA Development Economics Seminar, the University of Evry Macroeconomics Seminar, and the 1997 Annual Conference of the Latin American and Caribbean Economic Association for useful comments on earlier drafts of this paper. All remaining errors are mine only.
See Cho (1994) for an attempt at adjusting for the endogeneity of the sectoral change variable in a cross-section framework, using an instrumental variables method.
Some recent studies confirm the presence of (real) wage rigidity in developing countries: see for example, Rama (1998) for CFA countries. This study finds that the most likely candidates to explain real wage rigidity in CFA countries are government pay policies and (possibly) limited competition in product markets rather than distortive labor market policies (e.g. minimum wages).
In the absence of data on sectoral capital stocks and income shares of capital, the capital reallocation effect cannot be quantitatively estimated. Our results allow us nevertheless to state more precisely the conditions under which capital reallocation is growth-enhancing.
Sec Romer (1986), Lucas (1988).
Lewis (1954), Harris and Todaro (1970).
See Akerlof and Yellen (1986) for a survey of efficiency wage models of the labor market.
This is the order of magnitude reported in Dowrick and Gemmel (1991) for their sample of 78 countries (including 56 developing countries) over the period 1973-85: in the average country of their sample, the average labor productivity in the modem sector is 3.4 times that in agriculture.
We thank David Dollar for suggesting this explanation.
The author considered a decomposition of the Taiwanese economy in nine sectors, including agriculture.