Finance Webinar（2020-14)

Topic: Service-Led or Service-Biased Growth? Equilibrium Development Accounting Across Indian Districts

Speaker: Fabrizio Zilibotti, Yale University

Time: Wednesday, 30 September, 08:30-10:00am Beijing Time

Location: Microsoft Teams Online Conference Room

Abstract:

In many developing countries, urbanization and structural change take the form of a declining agricultural sector and an increasing employment share of the service sector without a significant change in the size of the manufacturing sector. Is the growth of services an engine of growth or simply a consequence of the income effects stemming from productivity growth in the goods-producing sectors? In this paper we present a new methodology to estimate the productivity of the service sector exploiting the granularity of data on employment and expenditure shares. The structural estimation hinges on a spatial equilibrium model where the employment structure depends on the relative productivity of labor in different sector-regions and on the local demand. The key assumptions are nonhomothetic preferences (of the PIGL class) and the assumption that services, different from goods, must be provided locally in each market. We apply our methodology to the economic development of India between 1987 and 2011. Our (preliminary) results suggest that productivity growth in consumer and producer services were important drivers of structural transformation and of an increase in the living standards of the more urbanized areas. The model also allow us to assess the unequal effects of growth at different ladders of the income distribution.

Introduction:

Fabrizio Zilibottiis Tuntex Professor of Economics at Yale University. He is a fellow of the Econometric Society, a past recipient of the Yrjö Jahnsson medal (best European economist below 45), and a former editor of Econometrica, the Review of Economic Studies, and the Journal of the European Economic Association. An important part of his research deals with the Chinese economy. His article "Growing Like China" (with Zheng Song and Kjetil Storesletten), published in the American Economic Review 2011, has received widespread recognition and multiple awards, among them, the Sun-Ye-Fang prize. His research on China also covers place-based policies, pensions, monetary policy, structural change, business cycle, and, recently, the effect of R&D on economic growth (see, in particular, "From Imitation to Innovation: Where Is all that Chinese R&D Going?" with Michael Koenig, Zheng Song, and Kjetil Storesletten, NBER Working Paper No. 27404). He is the author of the book "Love, Money, and Parenting" (with Matthias Doepke) published in 2019 by Princeton University Press, which studies the role of parenting style on human capital formation and inequality around the world. The volume has been translated in several languages ( including, in Asia, simplified and traditional Chinese, Japanese, Korean, etc.). The book is an economics bestseller in China, where it was translated and published by Truth&Wisdom Press.

//campuspress.yale.edu/zilibotti/

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