Productivity dynamics and structural change in the US manufacturing sector

The article investigates structural change among the four-digit (SIC) industries of the US manufacturing sector during 1958–1996 and its relation to productivity growth within a distribution dynamics framework. Focus is on the transition density of the Markov process that characterizes the value-added shares of the industries. This transition density is estimated nonparametrically as well as by maximum likelihood, in which case the functional form of the density is motivated by a search theoretic model. The nonparametric fit and the maximum likelihood fit show striking similarities. The relation of structural change to a measure of total factor productivity change is tested by quantile regression and appears to be significantly positive throughout. Copyright 2008 , Oxford University Press.