Skip to main content

Two Perspectives on Preferences and Structural Transformation

Author(s): Herrendorf, Berthold; Rogerson, Richard; Valentinyi, Ákos

To refer to this page use:
Abstract: We assess the empirical importance of changes in income and relative prices for structural transformation in the postwar United States. 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 inputoutput structure of the United States can reconcile these findings.
Publication Date: Dec-2013
Citation: Herrendorf, Berthold, Rogerson, Richard, Valentinyi, Ákos. (2013). Two Perspectives on Preferences and Structural Transformation. American Economic Review, 103 (7), 2752 - 2789. doi:10.1257/aer.103.7.2752
DOI: doi:10.1257/aer.103.7.2752
ISSN: 0002-8282
Pages: 2752 - 2789
Type of Material: Journal Article
Journal/Proceeding Title: American Economic Review
Version: Final published version. Article is made available in OAR by the publisher's permission or policy.

Items in OAR@Princeton are protected by copyright, with all rights reserved, unless otherwise indicated.