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.