The role of micro data in understanding structural transformation

Abstract

It has long been known that economic growth is accompanied by structural transformation of an economy away from subsistence agriculture and into more productive economic activities (Kuznets 1971, 1973). The literature on structural transformation has focused largely on movements of inputs and outputs from agricultural activities to industry and services. Painting with broad brush strokes, these aggregate sectoral shifts do capture much of what economists think of as structural transformation. Yet in recent years, richer micro datasets have become available and allowed researchers to paint a more nuanced picture of how structural change takes place in practice. This essay aims to take a review of this recent literature bringing micro data to bear on structural change, and to highlight additional opportunities for researchers to help shape our understanding of structural transformation and its role in the development process.