OCCUPATIONAL CHOICE AND STRUCTURAL CHANGE

The connection between average sectoral income, occupational choice and structural change has so far only been described vaguely for sectors dominated by small enterprises. Taking agriculture as an example, we first develop a theoretical model in which we explain the decision to take over a farm with the average agricultural household income in the past years and the number of farms with the patterns of occupational choice. We then estimate a regression in which we explain occupational choices by the sectoral income situation and rate of farm decline by earlier occupational choices. The results demonstrate that a good income situation increases the number of occupational choices in favour for farming, and that occupational choices for farming in turn slow down the decline in farm numbers.Occupational choices, Structural change, Agricultural income, Research paper, Labor and Human Capital,

Structural models and structural change: analytical principles and methodological issues

Structural analysis is the main topic of this paper and structural change is a dominant theme of the present work. The analysis of structural models and of theories of structural changes carried out in this paper has a double meaning. On the one hand, it allows to pick up several essential principles that characterize these models, on the other hand, it should allow us to reconsider some important methodological issues under a new light, such as different methods of decomposition of the productive systems, the problem of complexity and the strategies to reduce complexity. Moreover, the paper tries to compare Quesnay’s Tableau, taken as a benchmark model, with Leontief’s, von Neumann’s and Sraffa’s models to pick up the different features of these models with respect to his theoretical framework and also to identify their characteristics for structural analysis and structural change.

Conformism and Structural Change

We study structural change in a simple, two-sector endogenous growth model and show that the presence of commodity-specific consumption externalities can be a source of structural change. When the degrees of consumption externalities are different between different goods, the two sectors grow at different rates, whereas the aggregate economy exhibits balanced growth in the sense that capital stock and expenditure grow at the same constant rate. Under the more restrictive condition such that the degrees of consumption externalities are the same, structural change does not occur. We also show that the dependence of the benchmark consumption levels on the past consumption is crucial for the divergent patterns of structural change across countries.

Globalization and Structural Change

Speech by U.S. Secretary of Labor, Elaine L. Chao, for the G-8 Labor and Employment Ministers Conference in Germany addressing successes, opportunities, and challenges facing the 21st century workforce

Continuous record asymptotics for structural change models

For a partial structural change in a linear regression model with a single break, we develop a continuous record asymptotic framework to build inference methods for the break date. We have T observations with a sampling frequency h over a fixed time horizon [0 , N ], and let T →∞ with h ↓ 0 while keeping the time span N fixed. We impose very mild regularity conditions on an underlying continuous-time model assumed to generate the data. We consider the least-squares estimate of the break date and establish consistency and convergence rate. We provide a limit theory for shrinking magnitudes of shifts and locally increasing variances. The asymptotic distribution corresponds to the location of the extremum of a function of the quadratic variation of the regressors and of a Gaussian centered martingale process over a certain time interval. We can account for the asymmetric informational content provided by the pre- and post-break regimes and show how the location of the break and shift magnitude are key ingredients in shaping the distribution. We consider a feasible version based on plug-in estimates, which provides a very good approximation to the finite sample distribution. We use the concept of Highest Density Region to construct confidence sets. Overall, our method is reliable and delivers accurate coverage probabilities and relatively short average length of the confidence sets. Importantly, it does so irrespective of the size of the break

Structural change in the German banking system?

This paper starts out by pointing out the challenges and weaknesses which the German banking systems faces according to the prevailing views among national and international observers. These challenges include a generalproblem of profitability and, possibly as its main reason, the strong role of public banks. These concerns raise the questions whether the facts support this assessment of a general profitability problem and whether there are reasons to expect a fundamental or structural transformation of the German banking system. The paper contains four sections. The first one presents the evidence concerning the profitability problem in a comparative, international perspective. The second section presents information about the so-called three-pillar system of German banking. What might be surprising in this context is that the group of pub lic banks is not only the largest segment of the German banking system, but that the primary savings banks also are its financially most successful part. The German banking system is highly fragmented. This fact suggests to discuss past, present and possible future consolidations in the banking system in the third section. The authors provide evidence to the effect that within- group consolidation has been going on at a rapid pace in the public and the cooperative banking groups in recent years and that this development has not yet come to an end, while within-group consolidation among the large private banks, consolidation across group boundaries at a national level and cross-border or international consolidation has so far only happened at a limited scale, and do not appear to gain momentum in the near future. In the last section, the authors develop their explanation for the fact that large-scale and cross border consolidation has so far not materialized to any great extent. Drawing on the concept of complementarity, they argue that it would be difficult to expect these kinds of mergers and acquisitions happening within a financial system which is itself surprisingly stable, or, as one cal also call it, resistant to change

Macroeconomic Forecasting and Structural Change

The aim of this paper is to assess whether explicitly modeling structural change increases the accuracy of macroeconomic forecasts. We produce real time out-of-sample forecasts for inflation, the unemployment rate and the interest rate using a Time-Varying Coefficients VAR with Stochastic Volatility (TV-VAR) for the US. The model generates accurate predictions for the three variables. In particular for inflation the TVVAR outperforms, in terms of mean square forecast error, all the competing models: fixed coefficients VARs, Time-Varying ARs and the na¨ýve random walk model. These results are also shown to hold over the most recent period in which it has been hard to forecast inflation.

Structural Change in (Economic) Time Series

Methods for detecting structural changes, or change points, in time series data are widely used in many fields of science and engineering. This chapter sketches some basic methods for the analysis of structural changes in time series data. The exposition is confined to retrospective methods for univariate time series. Several recent methods for dating structural changes are compared using a time series of oil prices spanning more than 60 years. The methods broadly agree for the first part of the series up to the mid-1980s, for which changes are associated with major historical events, but provide somewhat different solutions thereafter, reflecting a gradual increase in oil prices that is not well described by a step function. As a further illustration, 1990s data on the volatility of the Hang Seng stock market index are reanalyzed.Comment: 12 pages, 6 figure

Macroeconomic forecasting and structural change

The aim of this paper is to assess whether explicitly modeling structural change increases the accuracy of macroeconomic forecasts. We produce real time out-of-sample forecasts for inflation, the unemployment rate and the interest rate using a Time-Varying Coefficients VAR with Stochastic Volatility (TV-VAR) for the US. The model generates accurate predictions for the three variables. In particular for inflation the TV-VAR outperforms, in terms of mean square forecast error, all the competing models: fixed coefficients VARs, Time-Varying ARs and the na¨ıve random walk model. These results are also shown to hold over the most recent period in which it has been hard to forecast inflation. JEL Classification: C32, E37, E47forecasting, inflation, stochastic volatility, Time Varying Vector Autoregression