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Journal Article

Structural Transformation and Labor Productivity in Brazil

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Marcolino,  Marcos Araujo
Potsdam Institute for Climate Impact Research;

Costa,  Daniela
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Marcolino, M. A., Costa, D. (2021): Structural Transformation and Labor Productivity in Brazil. - Revista Brasileira de Economia, 75, 4, 464-495.
https://doi.org/10.5935/0034-7140.20210020


Cite as: https://publications.pik-potsdam.de/pubman/item/item_26876
Abstract
This paper examines the labor reallocation across agriculture, manufacturing, and services, and their impacts on aggregate labor productivity in Brazil from 1950 to 2010. We us a multisector model that features nonhomothetic preferences with constant elasticity of substitution and wedge distortions. This framework allows us to decompose the drivers of labor reallocation into supply-side, demand-side, and wedges. For 1950-2010 period, demand-side effects were responsible for most of the reallocation of labor away from agriculture towards manufacturing and services. On the other hand, if we focus only on the 1980-2010 subperiod, supply-side drivers become the major determinant for labor reallocation.