Essays on Structural Change

Abstract

This dissertation consists of three chapters. The first chapter assesses the contribution of technological progress and increased degree of openness on the reallocation of employment using a two-country-two-sector dynamic model with multinational production. I find that exogenous technological progress in the U.S. goods sector leads to a 60% growth in measured sector TFP and a one percentage point increase in the employment share of the goods sector. TFP growth in the goods sector in the rest of the world and declined trade cost on goods imported by the U.S. account for an 18 percentage point decline in the employment share in the goods sector. If the model is recalibrated to abstract from multinational production, the impact on the goods employment share is underestimated by three percentage points, accounting for 30% of the observed decline in employment share in the goods sector. The second chapter presents the empirical details of the data used in the first chapter. The third chapter presents a model with which I infer the producer price indices of (i) content on the internet free to the consumers created by digital platforms and (ii) own-account intangible investment by the digital platforms in their stock of data and algorithms. Both price indices lack market transaction counterparts and are important inputs to estimating the elasticity of substitution between goods and services in investment expenditure.