Two perspectives on preferences and structural transformation

Herrendorf, Berthold, Rogerson, Richard and Valentinyi, Akos ORCID: https://orcid.org/0000-0002-9166-7489 2013. Two perspectives on preferences and structural transformation. American Economic Review 103 (7) , pp. 2752-2789. 10.1257/aer.103.7.2752

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Abstract

We assess the empirical importance of changes in income and relative prices for structural transformation in the postwar US. We explain two natural approaches to the data: sectors may be categories of final expenditure or value added; e.g., the service sector may be the final expenditure on services or the value added from service industries. We estimate preferences for each approach and find that with final expenditure income effects are the dominant force behind structural transformation whereas with value added categories price effects are more important. We show how the input--output structure of the US can reconcile these findings.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Schools > Business (Including Economics)
Subjects:	H Social Sciences > HB Economic Theory
Uncontrolled Keywords:	income effects; preferences; relative price effects; structural transformation
Publisher:	American Economic Association
ISSN:	0002-8282
Related URLs:	Publisher
Date of First Compliant Deposit:	30 March 2016
Last Modified:	09 May 2023 02:03
URI:	https://orca.cardiff.ac.uk/id/eprint/51191

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