Labour Productivity and Energy Use in a Three‐Sector Model: An Application to Egypt |
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| Authors: | Rudiger von Arnim Codrina Rada |
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| Institution: | 1. is Assistant Professor of Economics at the University of Utah (e‐mail: rudi.vonarnim@utah.edu). His research interests include macroeconomic theories of growth and distribution;2. economic development, particularly structural heterogeneity;3. and international economics, specifically the issue of global imbalances.;4. is Assistant Professor of Economics at the University of Utah (e‐mail: rada@economics.utah.edu). Her research concerns structural transformation in non‐industrialized countries as well as the economics of pensions with a particular emphasis on questions of distribution and class conflict. |
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| Abstract: | This article presents a model of a developing economy with three sectors — industry, agriculture and energy. Industry and energy are assumed to be demand‐constrained, but agriculture supply‐constrained. The model highlights: (a) structural transformation, through labour transfer from agriculture to industry; (b) inflation, driven by the interaction of demand and the supply constraint in agriculture; and (c) the link between energy use and labour productivity. Employing a Kaldor‐Verdoorn productivity rule in industry augmented with energy intensity — energy per unit of labour — as an argument, we emphasize that labour productivity growth is driven by energy intensity rather than energy productivity growth. As a consequence, emissions reduction without North–South technology transfer and financial assistance costs growth. |
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