A simple model of sectoral adjustment

Kiminori Matsuyama*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

54 Scopus citations


Despite the significance of limited labour mobility across sectors, few attempts have been made to produce dynamic models of sectoral adjustment which are consistent with perfect foresight and, yet, flexible enough to allow for a variety of dynamic experiments. This paper proposes a simple perfect-foresight model of two-sector economies, in which aggregate sectoral movement of labour takes place through the process of demographic change. The model is tractable enough that one can easily examine the effects of intertemporally complicated relative price shocks (both exogenous and endogenous) under a variety of assumptions on technology.

Original languageEnglish (US)
Pages (from-to)375-388
Number of pages14
JournalReview of Economic Studies
Issue number2
StatePublished - Jan 1 1992

ASJC Scopus subject areas

  • Economics and Econometrics


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