Mardi | 2016-05-24
16-17h20 salle des thèses

Xavier RAURICH – Edgar CRUZ

In the second half of the twenty century we observe two important patterns of structural change; first, a large shift of employment from the agriculture and manufacturing sectors to the service sector, and, second, a sustained increase in the amount of time devoted to leisure activities. We relate these two patterns of structural change by arguing that during leisure time we consume recreational services. The observed increase in leisure time then implies an increase in the consumption of these services, which introduces a new mechanism of structural change. In order to measure the relevance of this mechanism, we construct a multi-sector exogenous growth model with biased technological change. The new feature of the model is the introduction of recreational activities, which depend on both leisure time and on the consumption of recreational services. We introduce these activities by assuming a nested CES utility function. We show that the model explains the two patterns of structural change. We also show that the introduction of recreational activities improves the performance of the numerical simulations. Finally, we study the effects of fiscal policy. We show that the reduction in GDP due to an increase in the labor income tax is substantially larger when we consider that during leisure time we consume recreational services