Barriers to Growth-Enhancing Structural Transformation : The Role of Subnational Differences in Intersectoral Productivity Gaps

The movement of workers from the farm sector to a more productive nonfarm sector has failed to generate significant gains in labor productivity in recent decades in many developing countries. This paper offers a new perspective on the barriers to g...

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Main Authors:	Paul, Saumik, Raju, Dhushyanth
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2021
Subjects:	PRODUCTIVITY RESOURCE ALLOCATION LABOR PRODUCTIVITY SUBNATIONAL REGIONS INFORMAL SECTOR FORMAL SECTOR STRUCTURAL TRANSFORMATION
Online Access:	http://documents.worldbank.org/curated/en/563371622557285922/Barriers-to-Growth-Enhancing-Structural-Transformation-The-Role-of-Subnational-Differences-in-Intersectoral-Productivity-Gaps http://hdl.handle.net/10986/35645

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spelling	okr-10986-356452021-06-03T05:10:49Z Barriers to Growth-Enhancing Structural Transformation : The Role of Subnational Differences in Intersectoral Productivity Gaps Paul, Saumik Raju, Dhushyanth PRODUCTIVITY RESOURCE ALLOCATION LABOR PRODUCTIVITY SUBNATIONAL REGIONS INFORMAL SECTOR FORMAL SECTOR STRUCTURAL TRANSFORMATION The movement of workers from the farm sector to a more productive nonfarm sector has failed to generate significant gains in labor productivity in recent decades in many developing countries. This paper offers a new perspective on the barriers to growth-enhancing structural transformation, combining structural modeling with enterprise census data from Ghana. The paper argues that subnational differences in the intersectoral productivity gap between the nonfarm informal and formal sectors constrain the productivity gain from structural transformation. In Ghana, intersectoral productivity gaps among the richer regions are on average three times larger than among the poorer regions. The disparity in regional intersectoral productivity gaps is modeled as reflecting the disparity in the regional misallocation of labor between the informal and formal sectors. Misallocation is identified as the output wedge between the informal and formal sectors. Simulations suggest that a more productive nonfarm informal sector reduces the disparity in regional intersectoral productivity gaps and, in turn, increases national productivity and the contribution of structural transformation to national productivity. For example, a 90-percent reduction in the disparity in regional intersectoral productivity gaps raises Ghana’s national aggregate productivity by 11.9 percent and the contribution of structural transformation to productivity by 19.7 percent. 2021-06-02T15:43:09Z 2021-06-02T15:43:09Z 2021-06 Working Paper http://documents.worldbank.org/curated/en/563371622557285922/Barriers-to-Growth-Enhancing-Structural-Transformation-The-Role-of-Subnational-Differences-in-Intersectoral-Productivity-Gaps http://hdl.handle.net/10986/35645 English Policy Research Working Paper;No. 9683 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Africa Africa Western and Central (AFW) Ghana
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	PRODUCTIVITY RESOURCE ALLOCATION LABOR PRODUCTIVITY SUBNATIONAL REGIONS INFORMAL SECTOR FORMAL SECTOR STRUCTURAL TRANSFORMATION
spellingShingle	PRODUCTIVITY RESOURCE ALLOCATION LABOR PRODUCTIVITY SUBNATIONAL REGIONS INFORMAL SECTOR FORMAL SECTOR STRUCTURAL TRANSFORMATION Paul, Saumik Raju, Dhushyanth Barriers to Growth-Enhancing Structural Transformation : The Role of Subnational Differences in Intersectoral Productivity Gaps
geographic_facet	Africa Africa Western and Central (AFW) Ghana
relation	Policy Research Working Paper;No. 9683
description	The movement of workers from the farm sector to a more productive nonfarm sector has failed to generate significant gains in labor productivity in recent decades in many developing countries. This paper offers a new perspective on the barriers to growth-enhancing structural transformation, combining structural modeling with enterprise census data from Ghana. The paper argues that subnational differences in the intersectoral productivity gap between the nonfarm informal and formal sectors constrain the productivity gain from structural transformation. In Ghana, intersectoral productivity gaps among the richer regions are on average three times larger than among the poorer regions. The disparity in regional intersectoral productivity gaps is modeled as reflecting the disparity in the regional misallocation of labor between the informal and formal sectors. Misallocation is identified as the output wedge between the informal and formal sectors. Simulations suggest that a more productive nonfarm informal sector reduces the disparity in regional intersectoral productivity gaps and, in turn, increases national productivity and the contribution of structural transformation to national productivity. For example, a 90-percent reduction in the disparity in regional intersectoral productivity gaps raises Ghana’s national aggregate productivity by 11.9 percent and the contribution of structural transformation to productivity by 19.7 percent.
format	Working Paper
author	Paul, Saumik Raju, Dhushyanth
author_facet	Paul, Saumik Raju, Dhushyanth
author_sort	Paul, Saumik
title	Barriers to Growth-Enhancing Structural Transformation : The Role of Subnational Differences in Intersectoral Productivity Gaps
title_short	Barriers to Growth-Enhancing Structural Transformation : The Role of Subnational Differences in Intersectoral Productivity Gaps
title_full	Barriers to Growth-Enhancing Structural Transformation : The Role of Subnational Differences in Intersectoral Productivity Gaps
title_fullStr	Barriers to Growth-Enhancing Structural Transformation : The Role of Subnational Differences in Intersectoral Productivity Gaps
title_full_unstemmed	Barriers to Growth-Enhancing Structural Transformation : The Role of Subnational Differences in Intersectoral Productivity Gaps
title_sort	barriers to growth-enhancing structural transformation : the role of subnational differences in intersectoral productivity gaps
publisher	World Bank, Washington, DC
publishDate	2021
url	http://documents.worldbank.org/curated/en/563371622557285922/Barriers-to-Growth-Enhancing-Structural-Transformation-The-Role-of-Subnational-Differences-in-Intersectoral-Productivity-Gaps http://hdl.handle.net/10986/35645
_version_	1764483486567104512

Barriers to Growth-Enhancing Structural Transformation : The Role of Subnational Differences in Intersectoral Productivity Gaps

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