Sectoral Allocation of Labor Force with Development and the Effect of Trade Activity

There has been considerable uniformity noted across nations in the tendency of the labor force share in agriculture to fall and that in manufacturing to first rise and then fall. At the same time, the relationship between sectoral labor force shares and development has shown a definite contextual variation. This paper investigates how the size and nature of trade activity impacts upon the labor force transformation. The analysis is based upon Casetti's Expansion Method, and uses cross-sectional data from sixty-eight countries. Results indicate that the relationship between sectoral labor force shares and per capita GNP varies with the relative size of a country's imports as well as the composition of its exports and imports.