Sectoral regularities of productivity growth in developing countries--a Kaldorian interpretation

This paper provides a Kaldorian interpretation for empirical regularities of productivity growth at the sectoral level of the economy. The statistical evidence is based on a dataset drawn from internationally compatible time series for employment and value added in 30 developing countries. Based on novel non‐linear statistical techniques the findings show: (i) a regular pattern of positive sectoral employment elasticities with respect to output growth; (ii) robust differences across sectors in the magnitude of the employment elasticities; and (iii) employment elasticities for all sectors that are significantly less than unity, suggesting strong evidence for increasing returns at the sector level of the economy.